Comments on the Italian labour market reform Marco Leonardi Milano, 23 November 2012

Evaluation of Fornero reform 1. Good on reform of CIG and MINI-ASPI 2. Potentially good on reform of art Less good on apprenticeships as entry contracts 4. Good on stopping abuse of atypical contracts 5. Political economy of reform Withdrawal of CIG in deroga huge problem tackled by reform Reform all contracts as Germany or only new contracts as France? First time that with pension and labor market reform we touch the rights and contracts of current generation and not only of future generations

Dinamica degli occupati in Italia

Dinamica dei disoccupati in Italia

Decline of manufacturing employment

1.Good reform on CIG and MINI-ASPI Crisis hit on temporary contracts first and yet unemployment benefits «reduced» did not work. Reform of MINI-ASPI much needed. CIG was extended to all firms and now we have problem to withdraw it. Fornero reform solved political problem of withdrawing the CIG in deroga through 1) end of mobilità 2) contributions for all firms above 15 in enti bilaterali

Occupati per tipologia lavorativa – Anni (contributi % alla variazione tendenziale delloccupazione) Inizialmente calo autonomi a tempo pieno e soprattutto atipici Successivamente dipendenti permanenti a tempo pieno Ultimi trimestri tornano a diminuire anche autonomi a tempo pieno

Unemployment benefits do not work I beneficiari in Italia e in Veneto

Mini-Aspi is more inclusive. S. Sacchi in nelmerito.com PRE-REFORM: 2.5 millions of workers excluded from unemployment benefits. 40% of temporary contracts and 50% of agency workers excluded. POST-REFORM: «only» workers excluded. 15% of temporary workers and 20% agency workers excluded. All apprentices included.

Explosion of CIG in deroga 1.Le imprese tra crisi e selezione Diffusione delle crisi dimpresa: si può stimare che nel triennio circa imprese abbiano formalizzato situazioni di crisi con conseguenti sbocchi in cig straordinaria o in licenziamenti collettivi (pro memoria: sono meno di le imprese venete con più di 20 dipendenti, circa 3.000quelle con più di 50 dipendenti). Le sospensioni: ore autorizzate di cassa integrazione (in ml.) OrdinariaStraordinariaDerogaTotalePosti lavoro eq

2. Potentially good on art.18 PRE-REFORM: two problems 1) no individual dismissals in big firms and 2) fired workers not compensated if they lose court case. POST-REFORM: 1) more individual dismissals in big firms and 2) workers compensated. Reform is successful if transaction occurs and courts are avoided+workers get decent compensation upon firing. If transactions too low and no aspi after voluntary transaction then too many courts rulings. System of German automatic and predetermined severance pay needed, generous enough (more than in Germany) to convince workers to accept and avoid courts.

Firms fire few workers each Veneto Lavoro

Individual dismissals are important * Al netto del lavoro domestico e del lavoro intermittente. Fonte: elab. Veneto Lavoro su dati Silv (estrazione 24 aprile 2012)

Art 18 is important for wages and workforce composition Leonardi and Pica 2012

50% of transactions in Germany

Take it or go to court- the German way Reform is successful if we reach 50% of transactions. Post reform apparently more transactions with lower amounts Proposal: Monitor in the next months the average amount of transactions and then set it as a benchmark by law. In Germany is 0.5 monthly wage per year of tenure, probably too low. In Italy it could be 1 month of wage per year of tenure which corresponds to most transactions occurring at around 12 months for long-tenured workers.

3. Not good on apprenticeships as entry contracts No results on apprenticeship contracts but the problem is in the uncertainty of new laws. Trend decline in apprenticeship (manufacturing+demography) There is potential demand for unqualified jobs Paper shows that regions and sectors that applied new rules had success.

Graf Veneto. Posizioni di lavoro dipendente*. Variazioni rispetto al 30 giugno Saldi mensili cumulati per contratto

Occupati per professione – Variazione assoluta (dati in migliaia) La crisi ha diminuito loccupazione qualificata, le professioni operaie e aumentato gli impieghi a bassa qualificata

It all depends on regions: Cappellari, DellAringa and Leonardi 2012

4. Good at stopping abuse of atypical contracts. Veneto Lavoro Veneto. Posizioni di lavoro intermittente. Variazioni rispetto al 30 giugno 2008.

5. Political economy Young and old. Pension reform has bad effects on the youngs in short term but good effects in the long term! First time that with pension and labor market reform we touch the rights and contracts of current generation and not only of future generations

Substitution young-old in the short term

6. Conclusions First time that with pension and labor market reform we touch the rights and contracts of current generation and not only of future generations Success of the reform depends on resolution of uncertainty 1)in art.18 (judges+preliminary transactions) 2)in apprenticeship contracts