Labour Market Reform for More and Better Quality Jobs in Italy


Book Description

A well-functioning labour market is indispensable to promote job creation, increase living standards, and develop a cohesive society. In Italy, the various deficiencies of the labour market have resulted in high unemployment, low labour force participation and job-skill mismatch. These deficiencies have contributed to the problem of allocation of resources, income distribution, and low productivity, reducing people's well-being. The current government, following on past governments' reforms, is introducing a package of labour market reforms - the Jobs Act - to improve the labour market in a consistent way. The reform will make the labour market more flexible and inclusive, and reduce duality. The long-lasting problem of effective enforcement will need to be overcome, with an increased focus on rapid implementation by the current government. A set of well-designed institutions, not only labour market policies but also the education system and product market regulation, would encourage higher labour force participation, especially among women, and produce more and better quality jobs in a more skill-intensive economy. This Working Paper relates to the 2015 OECD Economic Survey of Italy (www.oecd.org/eco/surveys/economic-survey-italy.htm).







The Italian Labor Market


Book Description

Despite improvements in labor market performance over the past decade, owing in part to past reforms, Italy's employment and productivity outcomes continue to lag behind those of its European peers. This paper reviews Italy's institutional landscape and labor market trends from a cross-country perspective, and discusses possible avenues for further reform. The policy discussion draws on international reform experience and on simulations based on a calibrated labor market matching model. A key lesson is that the details of reform design, and the sequencing of reforms, matter greatly for labor market outcomes and for the fiscal costs associated with these reforms.




OECD Economic Surveys: Italy 2015


Book Description

This OECD Economic Survey of Italy examines recent economic developments, policies and prospects. Special chapters cover labour market reform and more and better quality jobs.




The Recent Reform of the Labour Market in Italy


Book Description

Italy undertook a major reform of the labour market in 2014-2015 (Jobs Act). This paper provides a compendium of the key changes introduced. The analysis shows that the Jobs Act has contributed to bringing Italian labour market institutions more closely into line with international benchmarks and with the principles of flexicurity. Employment protection legislation for permanent contracts has been brought into line with that of major European partners, although it remains more restrictive than the OECD average. The focus of passive labour market policies has shifted from job to worker protection, which will facilitate the reallocation of workers to more productive occupations. The designed strengthening of active labour market policies would improve job matching and reduce structural unemployment, but thorough implementation remains the key factor for achieving this critical goal. Extending the new rules on employment protection legislation also to existing permanent contracts and the strengthening of the collective bargaining framework could be considered as a follow up to the recent reform. Flanking measures to open product markets and reform the public sector are crucial to deliver the entire potential impact of the reform.




Competitiveness and Wage Bargaining Reform in Italy


Book Description

The growth of Italian exports has lagged that of euro area peers. Against the backdrop of unit labor costs that have risen faster than those in euro area peers, this paper examines whether there is a competitiveness challenge in Italy and evaluates the framework of wage bargaining. Wages are set at the sectoral level and extended nationally. However, they do not respond well to firm-specific productivity, regional disparities, or skill mismatches. Nominally rigid wages have also implied adjustment through lower profits and employment. Wage developments explain about 45 percent of the manufacturing unit labor cost gap with Germany. In a search-and-match DSGE model of the Italian labor market, this paper finds substantial gains from moving from sectoral- to firm-level wage setting of at least 3.5 percentage points lower unemployment (or higher employment) rate and a notable improvement in Italy’s competitiveness over the medium term.




Competitiveness and Wage Bargaining Reform in Italy


Book Description

The growth of Italian exports has lagged that of euro area peers. Against the backdrop of unit labor costs that have risen faster than those in euro area peers, this paper examines whether there is a competitiveness challenge in Italy and evaluates the framework of wage bargaining. Wages are set at the sectoral level and extended nationally. However, they do not respond well to firm-specific productivity, regional disparities, or skill mismatches. Nominally rigid wages have also implied adjustment through lower profits and employment. Wage developments explain about 45 percent of the manufacturing unit labor cost gap with Germany. In a search-and-match DSGE model of the Italian labor market, this paper finds substantial gains from moving from sectoral- to firm-level wage setting of at least 3.5 percentage points lower unemployment (or higher employment) rate and a notable improvement in Italy’s competitiveness over the medium term.




Italy: Quantifying the Benefits of a Comprehensive Reform Package


Book Description

This paper seeks to quantify the net benefits of a comprehensive reform package aimed at addressing Italy’s inter-related challenges. Specifically, it simulates the growth and competitiveness effects of a package of fiscal, financial, wage bargaining, and other structural reforms. Credible implementation of such a package yields substantial mediumterm dividends at negligible near-term growth costs. Real GDP growth is estimated to be substantially higher over the medium term, while the real effective exchange rate depreciates notably.




Strengthening Active Labour Market Policies in Italy


Book Description

This report on Italy is the sixth country study published in a series of reports looking into how policies connect people with jobs. It discusses how active labour market policies in Italy are performing both on the national and the regional level, focussing particularly on the reform process in the system of public employment services initiated by the Jobs Act. The ongoing reform has good potential to improve the performance of employment services in Italy, particularly if the stakeholders of the system cooperate to establish a binding performance management framework and develop national IT infrastructure supporting the tasks of the local offices to serve jobseekers and employers. The National Agency for Active Labour Market Policies has a key role in encouraging the cooperation between the stakeholders, leading the development of new tools and methodologies and thus supporting the local employment offices to implement the new service model. Besides the general reform process, the review looks at some specific approaches regarding providing employment services in Italy - using jobseeker profiling tools to target active labour market policies; increasing quality and capacity of employment services by contracting out employment services to private service providers; and reaching out to employers and advancing demand-side services.




The Italian Labor Market


Book Description

This paper provides a synthesis of existing and new empirical perspectives on the structure of the Italian labor market, using data at different levels of disaggregation. The analysis indicates that aggregate data mask considerable disparities in labor market outcomes across regions and demographic groups. The evolutions of sectoral wage and employment structures also point to some dimensions of labor market rigidities. A micro data set with individual data is then used to highlight key structural problems that affect labor supply and demand. The implications of these different strands of empirical analysis for the formulation and effective implementation of labor market policy are then discussed.