(Partial) nationalization of wages or tax-free wage bargaining?
The analysis of Walter Galbusera, former union leader in the UIL and now president of the Anna Kuliscioff Foundation
There seems to be a large convergence of political and social forces on the hypothesis of a strong reduction in the tax and contribution wedge, which would indirectly produce an increase in wages. The President of Confindustria Bonomi wished to see the government provision in black and white in a few days.
At the same time, evaluations on the worsening of the INPS budget due to the automatic mechanisms that protect pensions from inflation are also circulating in the newspapers, which according to some sources, as has already happened, could be partially subject to "freezes".
The defense of the purchasing power of the wages of active workers would be played out in this case on the state budget and its sustainability especially if, as is often invoked, these measures required a deviation, that is, an increase in debt.
The weight of indirect labor costs in ours has long been considered a critical factor that worsens when the purchasing power of wages is reduced. This is also produced by an average high coverage of the first pillar of the Italian social security system (pensions in Italy are around 75% of the salary while in Germany they guarantee 45% and the rest comes from collective or individual forms of supplementary pension) and from an unfair taxation especially towards those who receive a gross income exceeding 28,000 euros. But it is precisely these people who almost completely finance health care and assistance that is increasingly growing and less and less effective due to the inability to select those who are really in conditions of hardship.
The partial "nationalization" of the salary that is taking place, regardless of the judgment on the merits of the individual measures, even if all justifiable, has a weakness. The more relevant it is, the more it risks transforming the wage issue solely into a state budget issue which can only be seen as a balance between income and expenditure, and the sustainability or otherwise of further indebtedness. When there is a new expense who proposes it should also indicate the source of coverage (it's the Constitution, baby!). Of course, it is the Government's task, if it shares it and considers it possible, to offer compatible solutions, but it is now difficult to refrain from addressing the tax issue as a whole at the same time, starting with the identification of effective tools to combat tax evasion or the search for appropriate tax collection methods for multinationals.
Let's not forget that there are over a thousand (1,000!) Billion of uncollected tax credits that are estimated to be recovered if it goes well for 30%. Furthermore, it should not be underestimated that a disorganized system of deductions and concessions has meant that the range of those who do not contribute to health care and assistance systematically increases while the tax burden on other taxpayers is worsening. This “fiscal flattening” has ended up taking on excessive dimensions and cannot continue for long without provoking reactions, including political ones, especially in the lower levels of the middle classes who are the first victims.
To avoid being too influenced by the state budget, the union would do well to relaunch bargaining at the same time, claiming (as it does) the renewal of expired national contracts without asking for the recovery of all imported inflation, but above all by promoting a campaign of mobilization of its delegates in the workplace for the diffusion of a company bargaining that realizes an exchange between wages and productivity or efficiency of the service, which by its nature is at low inflationary risk.
Furthermore, with a view to defending the purchasing power of wages and supporting consumption, it would be amply justified to ask for the tax exemption of all wage increases. The effects on the state budget would be relative and at the same time the taxation of employees already unfair in relation to incomes just above the lower bracket would not worsen in relative terms.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/statalizzazione-parziale-del-salario-o-contrattazione-salariale-detassata/ on Tue, 28 Jun 2022 05:11:08 +0000.