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The Italian Government Banned Layoffs. Italian Bosses Are Fuming.

When the Italian government introduced a temporary ban on layoffs for the period of the coronavirus crisis, the employers’ federation reacted furiously. Firms have already received billions of euros in subsidies to help pay their workers’ wages — but what they can’t tolerate is any limit on their power to hire and fire at will.

A waiter serves customers on June 18, 2020 in Bergamo, Italy. (Emanuele Cremaschi / Getty Images)

For months, it’s as if every Italian TV station has been broadcasting the same message: the bosses’ campaign against “overindulged” workers. This already flared up in spring, when Italy was the first European country to be hit by the COVID-19 pandemic. Even at the height of the crisis, bosses’ federation Confindustria opposed any shutdown of nonessential production — preferring to keep dragging tens of thousands of workers and their families into potentially lethal danger.

In recent weeks, this voice of the Italian business elite has stepped up its campaign against the government’s coronavirus response measures, and in particular the temporary block on layoffs, first imposed during the shutdown. Together with the phalanx of journalists, economists, and commentators who echo its interests, Confindustria is seeking to gain elbow room for the next set of “restructuring” measures — that is, freedom to lump the costs of the crisis onto millions of workers.

One of the main steps taken by Giuseppe Conte’s government after the pandemic broke out in March, the block on layoffs was supposed to prevent the outbreak of mass unemployment. This was especially important as the pandemic conditions left millions of Italians worried whether they would even be able to pay the bills. A temporary halt, this measure was originally set to apply till August 31, but in recent days it has been extended till the end of October.

In reality, the government’s policy is not just about serving workers’ interests. It has been accompanied by a sharp cut in labor costs for firms, through the massive expansion of the Cassa Integrazioni Guadagni (CIG); indeed, through this “earnings integration fund,” the Italian state has devoted tens of billions of euros to paying workers’ wages. This allowed it to keep up employment levels, despite the fall in production — though in some sectors, it’s still far from clear that companies’ operations ever did suffer.

Businesses are thus the first beneficiaries of these state funds — and draw profits from them. According to a joint Banca d’Italia-INPS report published on July 29, some 51 percent of Italian firms, encompassing about 40 percent of private-sector workers, have drawn on CIG. Showing how much this is a subsidy for businesses — not for workers — the report further reveals that firms have saved around 1,400 euros a month per worker (and this is the average spread across all workers, including those not on CIG).

Yet while state welfare has saved billions for private firms, workers have lost around 27 percent of their gross income from work: CIG covers compensation up to 80 percent of wages, but the payments often don’t surpass a €1,000-a-month threshold imposed by law. Adding insult to injury — or maybe it’s just theft — around a quarter of firms making use of CIG didn’t actually suffer a drop-off in receipts in spring’s shutdown. So, their workers continued working at the same pace for lower wages — even as the firms were granted billions in state subsidies.

Here, we are talking about workers on open-ended contracts. But hundreds of thousands of others on fixed-term arrangements were, instead, sent home, without having their contracts renewed. These workers make up a far from negligible part of the “reserve army” for Italian industry: and it is thus no surprise that their fate is now a rallying cry among all those who demand an end to the layoffs ban. These latter claim that in entrenching those lucky enough to have a job in their posts, the halt on layoffs is leaving the crisis-afflicted youth high and dry.

Too Many Old Workers?

Yet the logic of such claims is far from self-evident. Even the OECD — a thoroughly free-market institution — seems much more moderate than the Italian neoliberals are in evaluating the various such measures governments have adopted in recent months. In one recent publication on this theme, we read that job retention schemes have supported around fifty million workers in OECD countries, through a drastic cut in labor costs for firms (shifted onto government balance sheets). Avoiding a further jump in unemployment numbers, such schemes have also softened the fall in income among tens of millions of working-class households.

In this OECD report, the idea that the layoffs ban could be extended even beyond the lockdown period is not considered any great drama for the market’s interests. Recognizing that these state job retention schemes above all help out businesses, the OECD recommends that they be made selective, limiting aid to the jobs best able to “survive” even once the crisis is over. But all in all, the OECD position appears almost like a call for sanity, faced with the outpourings coming from Italian employers’ bodies and neoliberal labor market “reformers.”

This latter group is typified by Tito Boeri — a former president of the INPS (social security and pension system) and respected labor economics professor at Milan’s Bocconi University. If we were to believe him, the layoffs ban imposed in March has become the cause of mass youth emigration from Italy. In an editorial published in the leading liberal daily La Repubblica, Boeri goes so far as to term the block on layoffs “in its current state, like a condemnation of whoever today wants to enter the labor market and a keen invitation for young people to leave our country.”

Yet if young people are again the category most vulnerable to the crisis, this problem didn’t just spring up yesterday. Rather, it owes to the greater degree of exploitation and in-work poverty to which young workers have been subjected by a continuous series of labor market reforms ever since the late 1990s. These reforms have helped along the deindustrialization process — in particular, making it easier for businesses — by turning the specialization of the Italian economy toward low added-value tertiary sectors (retail, catering and restaurants, tourism, etc.).

It is no accident that these are the sectors where new employment has been concentrated especially since the 2008 crisis — the same ones where the youngest segment of the workforce is most overrepresented. Boeri’s reference to Italians emigrating to seek work “because of the layoffs ban” is laughable when we consider that since 2002, almost two million Italian citizens have left the South for foreign shores, to which we can add their counterparts from the “wealthy, productive” North. These are numbers unseen since the 1950s.

But what Boeri has to say aren’t just the words of one technocrat; rather, he is giving vent to the political positions of part of the governing coalition. We also find such views among influential figures in the Democratic Party, like Tommaso Nannicini, an economist at Bocconi University and president of the Senate’s Labor Commission, and Economy Minister Roberto Gualtieri. They are also shared by Italia Viva, the small party led by former prime minister Matteo Renzi and, outside government ranks, by Giorgia Meloni of the far-right Fratelli d’Italia.

Indeed, while Boeri’s comments are a wholly ideological argument, they conform with the current power balance we see in the governance of the crisis. This amounts to a call for companies to be given unlimited freedom to handle the coming restructuring processes through wage devaluation (whether through attacking wages, working hours, employment levels, or how the work process itself is organized).

Decades of Attacks

Looking at things from this perspective, it is difficult to credit this umpteenth attempt to counterpose the young and unemployed to older workers on stable contracts. The fact that Boeri is regurgitating such claims is especially striking in a land like Italy, where the liberalization of the labor market since the 1990s has not just taken away rights and slashed wages, but institutionalized unpaid work. In recent years the employers’ greed has been keenly felt by some three hundred thousand people working as interns and apprentices — paid, if they’re “lucky,” just €400 a month, with no rights or even the good fortune to be considered a worker.

Boeri has also sought to project this offensive back in time — ridiculously asserting that the block on layoffs contravenes the Italian Constitution. Yet contrary to the Bocconi economist claims, precisely the unconstitutional thing is the “liberalization” of the labor market over the last three decades. For instance, if Article 36 of the Constitution proclaims that “Workers have the right to a remuneration commensurate to the quantity and quality of their work and in any case such as to ensure them and their families a free and dignified existence,” this is evidently not true of the new labor contracts we have mentioned.

This same document’s Article 1 proclaims Italy a “democratic republic founded on labor”; Article 3 sets out the “duty of the Republic to remove those socioeconomic obstacles of which constrain the freedom and equality of citizens, thereby impeding the full development of the human person and the effective participation of all workers in the country’s political, economic and social organization.” The contracts (and indeed, uncontracted jobs) that deny workers’ right to sick pay and holidays, alongside all the steps to push the power balance in favor of capital and slash wages, clearly contradict this.

Contrary to what Boeri thinks, the Italian Constitution born of the Resistance against fascism even stipulates that private property can be expropriated, in the general interest. But the mainstream strategy — embraced by liberal Democrats as by Matteo Salvini’s hard-right Lega — is the opposite of this. For they want to get rid of the block on layoffs, precisely in order to allow firms to hire workers with fewer protections, on more “flexible” contracts, and on lower wages. They also take the same side in proposing that firms be allowed to rehire workers on fixed-term contracts — even after they have been in post for over two years — without having to provide a justification.

This continues in line with the Berlusconi government’s 2001 Decreto Sacconi, which directly reduced the wages of — and increased the levels of precarity among — the young workers who entered the labor market right after the reform. It’s also exactly what the employers’ federation is calling for, as it seeks to turn the crisis in its own favor, once more taking shelter behind the narrative that a “rigid” labor market would threaten investment and thus the economic recovery. Still common in Italy, if not elsewhere, these stale claims are discredited by facts well documented by both theoretical and empirical research.

As across the West, since the 1990s the share of wages relative to profits has declined just as fast as “labor reforms” have made progress. Since the 1992 crisis, the reforms to “save the country on the markets” have always focused on cutting wages, first with the abolition of scala mobile (a mechanism indexing wages to inflation), then with the mass deregulation of employment contracts. Today, the mantra that “cutting rights and protections will create more employment” blatantly doesn’t stand up. By 2019, the total amount of hours worked still hadn’t returned to 2008 levels, even if the total number of people in work has increased.

This also highlights the structural underemployment in Italy, a land where the rate of involuntary part-time employment hit 64.1 percent in 2019; the European average is 23.4 percent. In fact, labor market rigidity and high unionization are good for the economy. Ultimately, labor conflict is the only real antidote to a capitalism that doesn’t even pose the question of investment and innovation — and can only extract profits by stepping up the exploitation of the workforce.

But the narrative coming from Confindustria clashes with a reality which even firms themselves admit. The rhetoric of flexibility as a drive to investment and thus higher competitiveness is often accompanied by the argument that the resources to be dedicated to labor — other than those for the reduction of labor costs to the firms’ advantage — should exclusively concern training the young and retraining the elderly, in view of the great transformations that await us. It is endlessly repeated that young Italian workers don’t have the necessary skills for “the challenge of the future,” new jobs with high technological content and so on.

These arguments do not hold water: a recent study by the ISTAT statistics agency shows that from 2016 to 2018, a period of major monetary incentives for “industry 4.0” — investment in technology linked to the Internet of Things and/or the automation-robotization of production processes concerned under 10 percent of firms, while 45 percent said that they had invested to boost their Internet connection. These are unquestionably signs of Italian production slipping backward: anything but grist to the mill of those who proclaim the “end of work” and its substitution by rising automation. From the same study, it also emerges that positive changes in the occupational structure will mainly concern jobs with technical-operative and not specialized tasks. The talk about “training” thus proves to be the umpteenth expedient narrative to justify the constant reduction in Italian workers’ wages. To oppose this strategy is an act of democratic, political, and intellectual hygiene.

Restructured

Yet the employers’ front is becoming both richer and ever more aggressive, gaining a free hand over internal restructuring and an exclusive stranglehold on the resources put into play by the Italian government and European Recovery Fund. We shouldn’t be surprised that capital fights for its own interests, indeed with increasing intensity. But we need to ask what response will come from the other side of the barricade — from the side that’s meant to be defending workers’ interests.

At the moment, the response from the trade unions and Italy’s small radical left seems rather missing — for they are wholly counting on the layoffs ban being extended, while they suck up everything else. Such a defensive strategy won’t be able to withstand an ever more dangerous situation, not least as it concerns only one part of working-class Italy, and not even the most vulnerable. But after decades in which labor has been shattered, we need a vision able to unite the many different fronts of the workforce.

Above all, we need an offensive that can win for all those today suffering economic insecurity — freeing them from ills like involuntary part-time conditions, piecework, fixed-term contracts, “apprenticeships,” unpaid work, and in-one-day, out-the-next jobs. Without that offensive, all that will be left will be the attempt to normalize a situation which itself bears the causes of the collapse of Italian society and democracy.

It’s time to openly confront the wage problem by introducing a guaranteed minimum salary, a limit below which no worker — regardless of their contractual condition, age, gender or nationality — can be paid. The minimum salary is a banner that can unite the demands against all kinds of piecework, unpaid jobs, and unrecognized posts like internships and apprenticeships. It also means an end to subcontracting processes which in reality represent nothing but a race to the bottom.

If we’re to fight youth unemployment, the way to do that is not to cast off older workers, but to create good-quality jobs that offer economic security and freedom of choice. This demands a massive program of public employment, responding also to the inadequacies of a state administration starved of personnel and resources through decades of austerity. No wonder that the average public employee in Italy today is fifty-five years old. Moreover, a strategic hiring plan should accompany a plan for the renationalization of whole sections of the productive apparatus, whose privatization over the years has served to increase not the efficiency of the economy, but profit margins.

Perhaps none of this will sound too revolutionary, and more is needed. But such demands are also something realizable — a much-needed banner to galvanize the social majority, in a country that could really do with a push.