I’ll explain why wages are lower in Italy

I'll explain why wages are lower in Italy

Giuliano Cazzola's analysis

Giuseppe Colombo's article on Huffpost raised, with solid arguments, the existence of an open and unresolved '' wage question '' in Italy. I do not pretend to address the complex of themes contained in the article; I think it is more useful to highlight the considerations that, in my opinion, are missing in the article and that lead us to a basic question: why do these things happen here, unlike other countries at least to the same extent? Why are wages lower and illegal work so widespread?

Often the doubt arises that it is not enough to attribute responsibility to politics, because in recent decades parties and coalitions of different inspiration have alternated with the government, without the situation changing at least significantly. We all remember the emotion with which Teresa Bellanova, a former trade unionist, then Minister of Agriculture in Conte 2, announced the approval of a law that would have inflicted a severe blow to the gang gangster in the countryside; except having to find the substantial failure of the operation after one year. L

The National Labor Inspectorate carried out 79,952 inspections in 2020 where it provided for the protection of 267,677 workers affected by irregularities. The calculation includes 22,366 “black” workers, equal to 8.4% of the total of illegal immigrants. In this regard, the Pnrr announces the hiring of another 2,000 inspectors who will be added to the current staff (indicated in the Pnrr in the number 4,500) over 10% of which are mainly used for judicial police functions (soldiers of the Carabinieri Command for Labor protection). It is necessary to underline that – albeit with the exceptionality of what happened last year – the "numbers" of the results of the supervisory activity are visibly modest, so much so that it is doubtful that even a desirable strengthening of the inspection staff is in able to drastically reduce the phenomena of irregularities in the protection and safety of work, which have more and more structural characteristics.

Colombo draws attention to the extent of the gap between the cost of labor and the net salary which makes any salary increase onerous for the employer which, once arrived on the paycheck, is barely received and in a deferred manner by the employee. But there are other factors that explain – even if they do not justify – the salary condition of Italian workers in comparison with colleagues from other countries. Columbus's article correctly recalls the differences in the cost of living; but even with purchasing power parity, the disadvantage of Italian wages still remains. There are other aspects that come into play: among them the question of labor productivity.

On this crucial aspect, Italy appears increasingly distant from Europe: according to Eurostat, in the same period of time (1995-2019) in which Italian labor productivity experienced an annual average of 0.3%, the EU at 28 it marked an increase of 1.6%; in the EU15 the average annual variation was 1.3% and 1.2% in the Euro area. Growth rates in line with the European average were recorded by France (1.3%), the United Kingdom (1.5%) and Germany (1.3%). For Spain, the growth rate (0.6%) was lower than the European average but higher than that of Italy.

It is sufficient to quote what Mario Draghi wrote in the Preface to the Pnrr about this now historic gap: "Behind the difficulty of the Italian economy to keep pace with the other advanced European countries and to correct its social and environmental imbalances, there is it is the productivity trend, much slower in Italy than in the rest of Europe. From 1999 to 2019, GDP per hour worked in Italy grew by 4.2 percent, while in France and Germany it increased by 21.2 and 21.3 percent respectively. Total factor productivity, an indicator that measures the overall efficiency of an economy – notes the President of the Council – decreased by 6.2 percent between 2001 and 2019, compared to a general increase at European level ".

Of course, productivity is not just a problem of human capital, but of the complex of inputs (investments, new technologies, R&D, efficient public services, etc.) that determine the organization of production and products. But to increase wages, it is necessary to know how to act in places where the exchange between the parties has a meaning, a convenience; or in the workplace through proximity bargaining, which is then – in various forms – one of the characteristics of the collective bargaining structure in force in other countries, recently strengthened (see Spain) where it was not a priority in the field of industrial relations .

In Italy not only have we not consolidated this orientation, but we have gone back to the primacy of the national category contract (what is the negotiable productivity at that level?) Which, moreover – following the debate on the legal minimum wage and the phenomenon of the so-called pirate contracts – has also made a comeback in the search for legal instruments to give them erga omnes effectiveness. In recent years, efforts have been made to make the de-taxation structural – within a certain ceiling – of wage improvements linked to objectives of improving productivity and the quality of work. Even with article 8 of the law of decree n.138 of 2011, a way was found to stabilize proximity bargaining; but on that rule there is still a fatwa of the CGIL to which all have adhered.

In this legislature, the yellow-green government certainly did not favor this level of negotiation; but also the Conte 2 government continued in reverse. Yet the great proof of responsibility that the social forces have provided in guaranteeing the reopening of companies in conditions of relative safety, should enhance the “proximity bargaining” that has allowed these results. In fairness, we should remember, even with all its limitations, the "escape route" in corporate welfare. The Plan does not deal with contractual and wage policy. This does not mean that the issue does not actually exist in reality, especially in the face of the need for a significant recovery in productivity compared to other countries. Mario Draghi has certainly not forgotten what he wrote, together with Jean Claude Trichet, in the letter of 5 August 2011: "There is also the need to further reform the collective wage bargaining system, allowing agreements at the company level in order to tailoring wages and working conditions to the specific needs of companies and making these agreements more relevant than other levels of negotiation ". There is a rumor that the prime minister wants to retrace the glories of the 1993 Protocol. Then the common goal was that of a wage policy consistent with the return from inflation. Today it could only be the turning point in the productivity of the Italian system.

Article published on huffingtonpost.it

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-le-retribuzioni-sono-piu-basse-in-italia/ on Sat, 19 Jun 2021 06:06:26 +0000.