Are Italian wages really lower than European wages? And why?
The absolute preponderance of the national contract defends the weakest but crushes the least weak, compressing the average wage. Claudio Negro's analysis of the Kuliscioff Foundation
The story of a society that is progressively impoverishing and increasing income inequalities within it is taking place, certainly influenced by the trade union mantra but now corroborated by more authoritative and objective institutional interventions ( Istat and Inps), mainly due to excessive wages. bass.
To tell the truth, this is a fairly recent argument, because until recently the narrative was that between the Workers' Statute and the National Collective Labor Agreement, protection was excellent!
To evaluate its authenticity it is worth evaluating some data. Eurostat tells us that the average gross hourly wage in 2021 was € 15.55 against € 16.9 in the Euro Area, 19.66 in Germany and 18.01 in France. The gross monthly wage in the same year was € 2,520 in Italy, in the Euro area 2,825, in Germany 3,349, in France 2,895. The annual € 34,792, in the Euro area € 38,559, in Germany 44,933, in France 37,956.
According to Job Pricing, which takes into consideration OECD data, in 2020 Italian wages were in 25th place out of 36 countries, equal to 80% of the OECD average salary. All previous data are expressed in Purchasing Power Parity.
It should be noted that the difference between contractual and de facto wages is quite low: 2.3% in 2020. Wages are therefore low on average, but it is worth breaking them down by areas of analysis to try to understand the causes.
First of all, despite the pauperist clichés, the difference between high and low wages is not high at all, indeed it is among the lowest in Europe: "low" wages, ie less than 2/3 of the median wage, are only 3.7% of total, the lowest in the EU, and the “high” ones, ie higher than the median of one and a half times, are 19%, the lowest after Germany (18.7%); the bulk of wages is fairly evenly distributed in a central band.
In line with this figure is that relating to the wage differential by education level: the difference in wages between the lowest (primary and / or lower secondary) and highest (tertiary and upper) levels of education in Italy is between € 27,806 per year and € 44,104; in Germany 27,005 and 68,144 respectively; in France 28,115 and 47,696; in the Euro area 25,518 and 51,200. Once again we find that "low" wages are higher than the European average, but "high" wages are lower. Surprisingly, a picture seems to emerge in which wages are on average low mainly due to the “high” ones, while the lower ones perform well. (Eurostat).
Even from the point of view of the distribution by age group, Italian wages show a more flattened curve than those of Germany and France: the growth, between the wages of those under 30 and those over 50, is 52% in Italy, 58% in Germany and 59% in France. While as far as the gender gap is concerned, we are in the middle of the table, in good company with Norway and Finland with an index of 16%.
It is also important to examine how wages change according to the productive sector: excluding agriculture and family services, which are difficult to weigh because they border on undeclared work, the sectors in which the wage (in fact) is lowest are construction (26,482 per year) and services (28,749). But, apart from the finance / credit sector, the industrial sectors are also not much higher: 32,000 the process industry and 30,486 the manufacturing industry (Job Pricing data). The comparison with European data is very instructive: the delta between the remuneration in the process industry (normally the highest excluding financial services) and services excluding the PA is 23.5% in Germany, 13% in France, 7% in Italy; and 14.5% in the Euro area (Eurostat data). This crushing of the Italian figure is essentially due to a relatively high level of remuneration in services (only -8.7% compared to the Euro area, -7.5% compared to France, -24% compared to Germany) and rather low for the process industry (-17% with the Euro area, minus 43.8% with Germany, -14.7% with France).
All these data refer to the “de facto” remuneration which includes the items attributable to the National Collective Labor Agreement plus elements contracted in the company (or more rarely in the territory); It should be noted that, as already mentioned, the amount of additional elements is on average quite small: 2.3%, but 11% for executives (the figure for middle managers is also low: 4.5%).
All this leads to a reflection on the quantitative and qualitative coverage of the national collective labor agreements.
First of all, as reported by the ADAPT Bulletin on the basis of Cnel and INPS data, of the 900 and broken Contracts deposited in the INPS Archive less than half are actually applied, and are those signed by CGIL CISL UIL plus occasionally some autonomous unions, and cover about the 97% of workers to whom a contract is applied. Therefore, the influence, even statistics, of the “pirate contracts” is very little. There are however, it is said, very many workers (millions, according to the cliché) who want it without any contract. In reality, as ADAPT demonstrates, it is enough to take into consideration the UNIEMENS presented to INPS in which the applied CCNL code must be reported: excluding the employees of the PA, whose contractual treatment is obviously known, the workers in the private sector are 13,643,659 , and only in 729,544 cases the UNIEMENS does not indicate the CCNL (data 2021). It is difficult to say how many cases there are simply of employers who forget to put the code, and how many workers to whom a CCNL is not applied but a direct agreement with the employer is used (which is different, however, from undeclared work). In any case, it can be said, probably exaggerating, that between 500 and 700 thousand employees work without a National Collective Labor Agreement, therefore between 3 and 5%. Ultimately, the contractual coverage protects at least 12,900,000 private employees, plus 3,200,000 public employees; 950,000 agricultural workers and about 800,000 domestic workers are left out, who are not considered in the statistics because they have plant contractual treatments very different from traditional CCNLs, and often less rigorously applied. In conclusion, collective bargaining in Italy is widely applied, with shares not far from 100%. Therefore the above data, which refer precisely to collective bargaining, provide a rather precise picture of the salary treatment existing in Italy.
From a qualitative point of view, it is inevitable to note how the national collective bargaining system effectively captures the objective that the current trade union philosophy attributes to it: to guarantee workers of low professionalism and small businesses, which do not have the negotiating strength to bargain in agency. In fact, as we have seen, the lower-tier Italian salary levels are on average high in Europe and less distant than the European average compared to the high levels.
In other words, the absolute preponderance of the National Contract defends the weakest but crushes the least weak, compressing the average wage. And this characteristic, which also occurs very often in trade union rhetoric (“being with the least”) determines the peculiarity of our pay system.
It is also worthwhile to focus on the so-called tax-contributory wedge, which defines the net salary that can be spent for workers. A very recent research by Università Cattolica tells us that the tax-contributory wedge is on average 46% of the cost of labor, so a salary of € 23,948 actually corresponds to a gross income of € 44,779. I define this figure, which is actually the labor cost for the company, as gross income because in the so-called wedge there are taxes paid by the worker (on average 15.3%), contributions paid by the worker (about 9%) and by the of the employer (about 24%): the latter mostly finance social security, which we can all in all consider as a sort of deferred salary, and other insurance-type benefits: Redundancy Fund, Unemployment Benefit, Illness, Maternity, Family Allowances , etc. In essence, just under half of the income generated in favor of the worker finances insurance and social security.
It is not a common situation: in Germany the pension contributions, between worker load and company load, are 16%, and obviously generate much lower pensions than the Italian ones. So all German workers pay a supplementary pension separately. Not only that: the tax wedge of German workers also includes a 14% that goes to finance public health; in Italy the worker does not pay it, because it is the responsibility of general taxation.
It should be noted here that for a large part of wages (at least those of less than € 15,000 per year, more than 8 million) the tax levy is canceled thanks to tax reliefs and tax deductions in favor of the weaker groups.
In essence, the tax wedge at the level of the highest European wages compresses the average net wage, bringing it below the average of the Euro area of about € 900 per year. This is a choice, perhaps never made programmatically, for which the insurance-social security purpose is privileged in remuneration.
However, the weight of the wedge is not sufficient to explain the crushing on the low values of Italian wages. Another cause is to be found in a curve of the professionalism present among the employed who in Italy tends to the plate, with a prevalence, compared to European partners, of poorly specialized work: in Italy the most present profile is that of skilled manual professions, while in Germany it is that of the intermediate technical professions, in France and in the Euro area the intellectual and scientific professions. Italy is also the country with the highest percentage of unskilled professions (13% against a Euro Area average of 9.9% – Eurostat data). Obviously, the parameterisation of wages on the basis of this scale results in a low average salary.
But there are also reasons intrinsic to the productive structure, in particular to the productivity not only of labor, but of all the factors that determine it. For a more precise picture, it is worth making a couple of comparisons between the Italian performance and that of our European partners: the GDP produced per hour worked in Italy is € 54.2, against € 60.5 in the Euro Area, 67 , 1 from France and 67.6 from France. The annual per capita GDP (per employee) is € 41,995 in Italy, € 47,133 for the Euro Area, 46,691 in France and 54,884 in Germany. The link between productivity and remuneration is viewed with a lot of annoyance by some trade unionists, evidently convinced that the wage levels must be decided by politics and not the market: to think that about 45 years ago the poor Lama warned that wages are not "variable independent ", as the forerunners of Landini and his friends thought at the time … After all we are seeing that in these days of wages the union is not discussing with companies but with the Government, and the increases it claims are not in relation to bargaining on the distribution of profits but to fiscal and parafiscal interventions. An old cultural legacy: if the owner does not break it up, one turns to Mother State.
Ultimately we acknowledge that in Italy the vast majority of workers are protected by national collective labor agreements, but that the average contractual wages are low compared to European levels, not very diversified by profession, age and sector, with the basic groups more aligned with European levels and those high much less aligned. A somewhat poor wage system prone to egalitarianism, more aimed at financing social insurance than spending power, with difficulty in stimulating-benefiting from productivity due to a very centralized collective bargaining model centered on the weakest groups . The problem of working poors is partly superimposable to that of undeclared work and largely coincides with part-time and non-continuous work.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/i-salari-italiani-sono-davvero-piu-bassi-di-quelli-europei-e-perche/ on Sat, 30 Jul 2022 06:34:42 +0000.