Cinzia Carta, Italian Collective Bargaining: Language and Strategies. Exercises in Style? [2014] Social Justice Conference 35

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1 Cinzia Carta, Italian Collective Bargaining: Language and Strategies. Exercises in Style? [2014] Social Justice Conference 35

2 Italian Collective Bargaining: Language and Strategies Exercises in Style? Introduction. Terms of the Debate 1. Fair Labor Conditions and Economic Implications in Italy ( ) 2. The Importance of Being Realistic: Economic Crisis, Industrial Conflict and Social Dialogue in Italy ( ) 3. Decentralized and Productivity-oriented Industrial Relations ( ) Conclusions. Italian Trade Unions in Search of a Model? Introduction. Terms of the Debate Nowadays industrial relations in Italy are strongly under pressure 1. European Institutions 2, Italian Governments, and Italian employers 3 are asking for a general adjustment of employment relations in order to improve productivity 4 and to reduce the so described- inefficient infighting which characterizes Italian collective bargaining 5. From this point of view, collective bargaining should realize the common interest of empowering Italian enterprises competitiveness in relation to the global economy 6. To the aim of facing the economic crisis (began in 2008), the central item of the well-known European Competitiveness Pact 7 has been clearly reproduced in the secret letter sent from ECB to Italy on August 5 th, 2011, which immediately influenced both Italian legislator and social parties. In this letter Italian Government was explicitly asked to realize a more decentralized bargaining system in order to better align wages and labor conditions with enterprises productivity needs 8. 1 Meardi G., Employment relations under external pressure: Italian and Spanish reforms in , International Labour Process Conference, Stockholm March Commissione Europea, Raccomandazione del Consiglio all Italia, COM (2013) As confirmed by the main Employers Trade Union (Confindustria) leaving the Italian Industrial Relation System in October 2011 (letter from Sergio Marchionne to Emma Marcegaglia, , This happened as a result of Italian Employees Trade Unions refusal to settle derogatory rules (to sectoral collective agreement and to the law) at enterprise level (see chapter 3, c)). They indeed signed a nationwide Intersectoralal Agreement ( Accordo Interconfederale ) in order to express some self restraint in applying the derogation possibility offered by the law (chapter 8, l. 148/2011). 4 This is not only an Italian tencency, but rather European, Janssen R., The Authonomy of Collective Bargaining Matters, in Social Europe Column, , in 5 Corazza L., Il nuovo conflitto collettivo, Franco Angeli, 2012 p Keune M., Decentralizing Wage Setting In Times of Crisis? The Regulation and The Use of Wage-Related Derogation Clauses in Seven European Countries, in European Labour Law Journal, Volume 2, No. 1, 2011, p. 86 ff. 7 European Council, Euro Plus Pact, March, 2010, EUCO 10/1/11, chapter Draghi M., Trichet J.-C., Letter to the Italian Prime Minister Silvio Berlusconi of 5 August 2011, In Corriere Della Sera,

3 Since the economic relevance of collective bargaining seems to be these days a crucial theme when referring to industrial relations 9, the present study will move from a diachronic analysis of collective bargaining economic implications. I will focus on the study of some relevant Italian collective bargaining moments, in order to describe how the recent approach could assert itself. By recent approach I refer here to the idea that economic growth should be reached through a more efficient collective bargaining 10. The importance of a more regulated, participated, controlled and productivity-oriented Bargaining System seems to be explicitly agreed by all actors (at least) since 1993, though for possibly different reasons. In 1993 all nationwide trade unions signed an Intersectoral Collective Agreement with the intent of shaping a more controlled and productivity-oriented bargaining. At the same time, the need of a more controlled system might have been pursuing different goals, from conflict moderation to trade unions strength affirmation 11. As it often happens with historical landmarks, their relevance can be moreover misunderstood due to the use of a traditional language but with a shift in the meaning. This is for example the case of this Agreements previsions about wages alignment with inflation 12. In the present study I will try to analyze the objectives pursued by Italian social parties clarifying the meaning of expressions like wages aligned with productivity and controlled collective bargaining as far as possible. More generally, the traditional scopes of setting fair work conditions, pursuing wealth redistribution and creating a more democratic society through collective bargaining 13 seem to be simply described in new modern words when referring to industrial relations as an instrument of social dialogue capable of reaching the above mentioned economic results 14. Conversely, I will outline how deeply changed is the scope attributed in Italian society to trade unions action in the last few decades. To this purpose I do not mean to create a complete theory of collective bargaining. Neither in the sense of describing the networks of rules that composes the 9 Lyon-Caen A., Droit du travail et libéralisation des échanges: régards sur leur liason, in Lyon-Caen A., Perulli A., Liberalizzazione degli scambi, integrazione dei mercati e diritto del lavoro, CEDAM, 2005, p Perulli A., Delocalizzazione produttiva e relazioni industriali della globalizzazione. Note a margine del caso Fiat, in Lavoro e Diritto, 2, 2011, p. 343 ff.; Corazza L., Tregua sindacale, governo del conflitto collettivo e competitività internazionale, in Rivista Italiana di Diritto del Lavoro, 2011, 4, p. 617 ff.; Roccella M., Una politica del lavoro a doppio fondo: rapporti di lavoro e relazioni sindacali nella IX legislatura, in Lavoro e Diritto, 1, 2004, p.59 ff.; Biagi M., Competitività e risorse umane: modernizzare la regolazione dei rapporti di lavoro, in Rivista Italiana di Diritto del Lavoro, 2001, p. 257 ff. 11 Chapter Chapter Kanh Freund O., Labour and The Law, Stevens & Sons, 1977, p. 51; Giugni G., Introduzione allo studio della autonomia collettiva, in Pubblicazioni della facoltà di economia e commercio dell Università di Roma, 1977; Pedrazzoli M. Democrazia industriale e subordinazione. Poteri e fattispecie nel sistema giuridico del lavoro, Giuffrè, Bellardi Laura, Dalla concertazione al dialogo sociale: scelte politiche e nuove regole, in Lavoro e Diritto, 1, 2004, p. 183 ff.

4 Italian industrial relation system 15 nor in the sense of studying the sources of conflict that are at the origin of Industrial relations 16 in Italy. The intent is, more modestly, to clarify what are we talking about when the debate refers to Italian collective bargaining ability to align wages with productivity and to create a more democratic workers participation in Italian collective bargaining process. This approach could automatically lead to the question whether Italian trade unions are, are not or could ever be institutions capable of creating social justice. A proper and complete answer elaborated from a theoretical point of view would be too complex to be proposed here, starting with the question about how the expression social justice itself should be understood. Thus, my approach to the problem will be as pragmatic as possible. The idea of social justice I will refer to can be briefly defined as the propensity to overtake a society based on free market in order to subordinate market to democracy 17. From an industrial relation point of view, this means balancing economic reasons to fair wages and occupational ones 18 and preferring democratic bargaining processes to unilateral management decisions 19. Once established this, one can consider fair labor conditions (for instance fair wages, working time, workers classification) 20 and the construction of a democratic collective bargaining process 21 as the two main goals theoretically to be obtained thanks to collective bargaining. If these goals seem to be achieved or at least pursued as collective bargaining result, one can esteem that Italian trade unions are institutions capable of following purposes coherently with a general idea of social justice - as a matter of fact. The purpose of this paper will be indeed focusing on the aims followed and the results obtained by collective bargaining in Italy, rather than proposing a complete model of Italian industrial relations. This pragmatic approach does not imply that the fact that collective bargaining in Italy may have not reached its goals in terms of social justice has the same weight than the theoretical idea of which goals collective bargaining should pursue 22. Factual circumstances do not indeed demonstrate that the theoretical view of the scope of collective bargaining did not change over time. 15 Dunlop J.T., Industrial Relation Systems, Henry Holt and Company, 1958, p Hyman R., Industrial Relations. A Marxist introduction, McMillan Press, 1975, p Polanj K., La grande trasformazione, Einaudi, 2010, p. 294, original title: The Great Transformation, published in Polanj K., La grande trasformazione, cit., p For a complete theory of the possibility to build an industrial democracy in a legal contest of workers subordination, Pedrazzoli M. Democrazia industriale e subordinazione. Poteri e fattispecie nel sistema giuridico del lavoro, cit. The author also considers collective bargaining, discussing whether its action can have some relevance about the subordination to the employer s power. For further reflections, AA.VV., (edited by), Nogler L., Corazza L. Risistemare il diritto del lavoro. Liber amicorum Marcello Pedrazzoli, Franco Angeli, 2012, part II, Democrazia industriale e partecipazione. 20 For Italian doctrine about this topic, see for instance Scognamiglio R., Dimensione sindacale/collettiva del diritto del lavoro, in Rivista Italiana di Diritto del Lavoro, 2011, 4, pp. 487 ff. 21 Alleva P., Le radici della democrazia sindacale nei luoghi di lavoro, in Associazione per i diritti sociali e la cittadinanza, in According to the prevalent perception of the role attributed to employees trade unions in a society.

5 Thus, I will try to determine whether the factual overlapping between employees trade unions declared goals and enterprises productivity purposes can be described as an ideological result or a balance of powers outcome. To answer these questions I will outline historical, economic and social circumstances that may have influenced the collective bargaining results. The existence of ideological changes could be empirically shown by the change in collective bargaining main and most crucial items, despite the existence of an apparently common core of language and previsions. This is the reason why I will analyze some recent Intersectoral Collective Agreements that settle meaningfully new rules about the negotiation process. For the sake of simplicity, I will divide this study in three paragraphs. At first, I will analyze collective bargaining capacity in terms of social wealth redistribution from 1945 until the Collective Agreement settled in 1993, evaluating only private sector and especially industry. I will examine: the relevance of the economic role to be or not to be played by trade unions when fighting for fairest wages and work conditions (chapter 1); the existing relationship between Italian economic recovery, centralized collective bargaining, social conflict and public consultation in Italy (chapter 2). The analysis will take into account the instruments of stabilization of our nonregulated bargaining system. More specifically: Courts interpretation of the constitutional right of decent wage conditions and national trade unions unity of action. Afterwards, I will move on the analysis of the later changes occurred in Italian industrial relations, caused by the different historical, political, economic and ideological context. It will be discussed how collective bargaining regulation is increasingly seen by Italian trade unions as a useful instrument to affirm their existence as legitimate interpreters of workers needs. I will examine collective bargaining objectives set by Italian trade unions themselves in the most recent National Intersectoral Collective Agreements and the role attributed to decentralized collective agreements by Italian most recent legislation (chapter 3.). In conclusion, the analysis will try to answer two questions that can clarify some aspects of Italian trade unions strategy as social justice hypothetical agents. At first, after having defined the meaning of a collective bargaining economic role, it will be discussed whether it represents the reason why trade unions do exist or the consequence of their social and politic relevance. Afterwards, it will be examined if the recent paradigm change should be seen as a new affirmation of collective bargaining role in Italian society or in a way to keep social consent and support the existence of Italian collective bargaining itself. The first question is strictly related to the compromise between economic reasons and social justice purposes in Italian collective bargaining system. It will outline the existence of a complex relationship between these two terms. The second one will show a growing trade unions legitimacy

6 interest. The question is if in the bargaining contest the latter will be able to create more social justice in terms of non-unilateral decisions or not. 1. Fair Labor Conditions and Economic Implications in Italy ( ) One can generally agree with the assumption that trade unions economic role started to be studied by mainstream economic analysis since XX century 23. Before that, their role was normally excluded by the domain of an economic analysis of society 24 - usually based on sums of single behaviors. Especially after II World War, the growing relevance of collective phenomenon led to a more specific consideration of trade unions as unavoidable players in labor costs settlement. Except some authors, Unions were at first described by orthodox microeconomic analysis as economic units pursuing economic goals and very little considered in their institutional and political role 25. Conversely, the institutional approach combined microeconomic theories with social and historical elements, in order to build a complete picture of the phenomenon. Webb s theories have been probably pioneers from this point of view 26, going beyond the microeconomic analysis of collective bargaining. However, their trade unions action description was still based on a bargaining theory (referring to strictly economic goals) and not yet on a negotiation theory (referring also to other goals). According to their Industrial Democracy, trade unions action had as preeminent scope keeping workers of the same sector together when asking for better working conditions. The existence of a more democratic society was considered a result to be preferably obtained thanks to law reforms. Wage bargaining could surely be considered as a weapon to be used meanwhile 27, but the bargaining object was still described as limited to labor conditions and wages. More general scopes were considered to be out of the bargaining domain. I do not mean to digress by introducing the history of collective bargaining theories. In the context of the present study it is nonetheless necessary to clearly understand the logic distinction between bargaining and negotiation since these terms are normally used as synonymous. This distinction 23 Negrelli S., Relazioni industriali e gestione delle risorse umane nelle imprese, in AA.VV. (edited by) Cella G.P., Treu T. Le nuove relazioni industriali, Il Mulino, 1988, p Drakopoulos S. A. and Katselidis I., The Development of Trade Union Theory and Mainstream Economic Methodology, University of Athens, 2012, in Jevons, S. W., The State in Relation to Labour, Macmillan,1882, p. 6 ff. 25 Drakopoulos S. A. and Katselidis I., The Development of Trade Union Theory and Mainstream Economic Methodology, cit.; Kaufmann B.E., Models of Union Wage Determination: What Have We Lerned Since Dunlop and Ross?, in Industrial Relations, vol. 41, 2002, pp ; Kaufmann B.E., Sidney and Beatrice Webb s Institutional Theory of Labor Markets and Wage Determination, in W.J Usery Workplace Research Group Paper Series, Working Paper , January Webb S. and B. Industrial Democracy, Longmans, Green and Co, 1902; tr. It. La democrazia industriale, Biblioteca dell economista, UTET, More precisely, their theory about Industrial Democracy was based on a three elements: mutual assurance between workers, collective bargaining, and legal enactment. The first one represents an idealistic workers unity, the second one organizes workers according to their sector and qualification interests, the last one can settle general democratic rules thanks to social parties influence. 27 Tarantelli E., Il ruolo economico del sindacato, Laterza, 1978.

7 has been first introduced in industrial relations studies during the sixties by Fox and Flanders 28, who extended trade unions purposes to the regulation of labor relations itself. According to their theory, collective bargaining does not simply establish a price for the asymmetry between capital and work (as in Webb s theories) but it is also an instrument of conflict management. In fact, it determines its own rules, taking also social consent to trade unions into account. It will be discussed that, if bargaining about wages and labor conditions in Italy had surely a central role, Italian trade unions strategy can better described thanks to this notion of negotiation. It will be studied that trade unions made a relevant bargaining effort in the direction of an agreed collective bargaining framework. A pragmatic question to be analyzed is whether this efforts prevailed to the strictly bargaining ones in employee s union strategy. In addition to this, Italian collective agreements reflect the complex relation between collective bargaining and politics in this Country. To outline this characteristic, some relevant historical periods will be examined, in order to discuss trade unions relevance in industrial conflict moderation and in managing general problems of the economic system 29. Thus, collective bargaining includes more and more at least since the seventies - other elements than wages and labor conditions, such as enterprises crisis management, social peace clauses, competitiveness goals, and flexibility measures 30. As it will be examined, the economically valuable scopes pursued by trade unions should be seen as a part of the whole negotiation process. It will be shown that they might have not always been based on economically rational strategies. Therefore, Italian trade union bargaining is more comprehensible if considered also as a consequence of an external political, social and ideal point of view 31. What it is interesting to discuss here is the mentioned observation that the economic goals - pursued through collective bargaining have been in Italian system mainly a consequence of non-economic reasons. When generally speaking of trade unions economic role one can imagine that one is referring to trade unions as an economic unit comparable to all others (such as employers). On the contrary, their economic role should not be confused with the idea that they follow an economic rational strategy. This distinction can be perfectly shown through Italian industrial relation history. 28 Fox A., Flanders A., Reform of collective bargaining: from Donovan to Durkheim, in British journal of industrial relations, 1969, 7, p , tr. It. La riforma della contrattazione collettiva, da Donovan a Durkheim, in La contesa industriale, Clegg H.A., Flanders A, Fox A., p. 44 ff. 29 Regalia I., Regini M., Sindacati, istituzioni, sistema politico, in AA.VV., (edited by) Cella G.P., Treu T., Le nuove relazioni industriali, cit., p Negrelli S., Relazioni industriali e gestione delle risorse umane nelle imprese, cit., p Tarantelli E, Il ruolo economico del sindacato, cit., p. 67.

8 From a theoretical point of view, if trade unions were rational economic units as firms and employers 32, they in a perfect competition market, where there is no lack of information nor transaction fees and where all workers of the same level are organized by one Trade Union only 33 should bargain wages and work conditions until enterprises could realistically pay. They would follow a bargaining strategy strictly related to the profits realized. In other words, their purpose would be to limit the amount of employers gains to be destined to other investments and fight for the redistribution of the produced wealth among workers 34. If this perfect market rationality was followed by trade unions, they would effectively have an economic role about wealth redistribution between social classes. At the same time, if enterprises did not produce enough wealth to pay decent wages and save the necessary capital to be re-invested in order to continue their production 35, wages should go under the minimum necessary level to decently survive. The first observation to this picture is that Italian trade unions were born in opposition to the above described perfect commodification of work: trade unions were indeed a reaction to not acceptable work conditions in relation to human needs of workers and not in relation to how much it was produced 36. This genetic characteristic could explain why the idea of a perfectly redistributive strategy was never actually considered to be the purpose of Italian trade unions action. Giving power to a not strictly redistributive thinking was by the very beginning precisely the reason why workers needed trade unions to bargain with employers. Hence, collective bargaining in Italy should be seen as a dialogue between economic reasons (enterprises) and not economic ones (trade unions). Only then the economic consequences should be examined. With economic reasons I mean here perfectly rational in relation to the amount of wealth produced and the quantity consequently available for redistribution This assumption is the main critics that should be moved to the predominant European ideology at the beginning of the XX century, according to Karl Polanj s theories: Polanj K., La grande trasformazione, cit., Einaudi, pp. 311 ff. 33 Cooter R., Mattei U., Monateri G., Pardolesi R., Ulen T., Il mercato delle regole. Analisi economica del diritto civile, il Mulino, 2006; Cusin G., Economia del lavoro, Cafoscarina, 2010, p. 181 ff. 34 This is not a new theme for economists, as Jon Stuart Mill considered wages depending only on the proportion between the number of the labouring population, and the capital or other funds devoted to the purchase of labour; we will say, for shortness, the capital, deeming that it is not the absolute amount of accumulation or of production, that is of importance to the labouring class ( ): it is the proportion between those funds and the numbers among whom they are shared. The condition of the class can be bettered in no other way than by altering that proportion to their advantage, Mill J.S., Principles of Political Economy with some of their Applications to Social Philosophy, 1848, II.11.10, also open source on 35 Marx C., il Capitale, Utet, 2013; original title: Das Kapital (first published in 1867), open source on, for an english open source text,, vol. 1, cap Carinci F., De Luca Tamajo R., Tosi P., Treu T., Il Diritto sindacale, in Diritto del Lavoro, vol. 1, Utet, 2013, pp.28-29; Hyman, Industrial Relations. A Marxist Introduction, cit., pp. 97 ff. 37 For a theorization of labor law and collective bargaining as following external logics to the free market, Polanj K., La grande trasformazione, cit., p

9 As said before, an extreme redistributive system was never considered in Italian collective bargaining as a realistic or eligible scenario, nor in terms of lowering too much wages and labor conditions nor in terms of redistributing social wealth proportionally 38. Italian collective bargaining history had known periods of serious social conflict mainly connected to the economic boom- and periods of great economic difficulties - when a general lowering of the conflict was observable 39. The redistributive scenario never happened, nor when trade unions were weak nor when they had more social power 40. An explanation of this could be related to the observation that the economic goals pursued by trade unions were not based, as said before, on an economic evaluation, but rather on a social and political one 41. More precisely, we can analyze the following industrial relations historical landmarks. a) In periods of intense exploitation of manufacturing labor force, this working class asked for better labor conditions per se and not in relation to productivity. They normally gained pay increase and work intensification decrease that were significantly under the productivity growth but enough to limit social conflict 42. The mentioned situation of intense work exploitation occurred between the fifties and the sixties of the last century 43. Actually, there had been brief period of working conditions enhancement thanks to a collective reaction to metalworkers pauperism. Some collective agreements settled consistent wage raise ( ) 44. After the historical Intersectoral 45 threshold agreement (1945) 46, however, various years of immobility followed. During the fifties, national collective agreements were signed several years later the expected date, causing very little wage adjustment and not effectively ameliorating work conditions 47. The national agreement signed for metalworkers the most significant labor force at the time - in 1948 will be renewed only in During this decade, minimum wages settled by sectoral agreements grew very little if compared with productivity growth; in various enterprises collective agreements were not respected and labor conditions derived 38 The very reasons of this could result from the historical compromise that characterizes all European capitalistic democracy, as we will examine in the next paragraph. 39 Corazza L., Il nuovo conflitto collettivo, cit. 40 Salerni D., Il sistema di relazioni industriali in Italia, Il Mulino, 1981, pp. 246 ff. 41 See chapter Tarantelli, ll ruolo economico del sindacato, cit., p. 83; Giugni G., Diritto sindacale, Cacucci, 2008, p Salerni D., Il sistema di relazioni industriali in Italia, cit., p In 1945 and 1946 two agreements settled better conditions for metalworkers. The first one ( ) was signed for the main Italian enterprise (Fiat), the second one was binding for all industrial employers ( ). This agreement explicitly established a wage truce of six months. 45 By intersectoralal is meant (in Italy) a bargaining level where all (or most of) national representatives of each sector are involved. 46 This Intersectoralal Agreement ( ) was settled between the main Employees and Employers Trade Union at the time (Confederazione Generale del Lavoro and Confederazione Generale dell Industria Italiana) in order to align wages with inflaction. The target was saving wages purchasing power. Alignments were diversified depending by territory, age and genre. The automatic alignment system, named sliding scale was based on a certain percentage on the wage amount. 47 Giugni G., Diritto sindacale, cit., p. 156.

10 by unilateral management decisions; there was almost any collective bargaining at enterprise level. 48 Wage and labor condition ameliorations were pursued not as a right of redistribution between classes, but to react to labor force in pauperism - especially serious as far as metalworkers were concerned. b) When trade unions strength led to significantly better wages and working conditions in some sectors, an emerging ideologically egalitarian approach 49 justified more wage claims in Italian society. They came also from working categories not interested by the same gap between productivity and wages, but characterized by productive sector or workers qualification similarities 50. An example of this situation is represented by Italian collective bargaining during the period These years followed a decade of great changes in Italian industrial relations system, which was now characterized by a decentralized collective bargaining stronger than ever 51 and by a trade union great organizational capacity in terms of strikes- despite the managerial strong reactions against industrial conflict 52. The aim of the present paragraph is to explain the wage spheres phenomenon, actually happened in Italy in those years and already theoretically analyzed by economic studies on collective bargaining in the past 53. According to these studies, collective bargaining general increase arose from a comprehension of wages in terms of status 54. In this model status is basically represented by consumes that each worker can afford. If one working category obtains more redistribution, other classes - accustomed to the same life style - could highlight that similarities concerning production field or tasks should justify wage growth for them too. Consequently, other working classes collective grievances could be pushed by the same reasoning. If previously some of them benefitted of a privileged wage status, proportions should be respected in order to keep their claims under control 55. This situation demonstrates that when redistributive logics do not concern the justness of capital accumulation but simply the possibility of redistributing more wealth, redistribution has nothing to do with economic logics based on the production amount and on the necessary capital accumulation to be reinvested in order to continue productivity. What actually happens is a fight between working classes about their proportions in terms of social relevance. This could erode the amount to be destined to investments in a capitalistic economy. Since this does not happen if a complete social and economic change of 48 Salerni D., Il sistema di relazioni industriali in Italia, cit., p Salerni D., Il sistema di relazioni industriali in Italia, cit., p, 32-34, p-36-34; Ichino P., Does Labour Law actually produce equality among workers?, in 50 Tarantelli, ll ruolo economico del sindacato, cit., p. 43, Pizzorno A. et Others, Lotte operaie e sindacato: il ciclo in Italia, Il Mulino, Carinci F., F., De Luca Tamajo R., Tosi P., Treu T., Il Diritto sindacale, cit., p Hicks, J.R., The Theory of Wages, Macmillan, 1932; Tarantelli E., Il ruolo economico del sindacato cit., p Salerni D., Il sistema di relazioni industriali in Italia, cit., p Salerni D., Il sistema di relazioni industriali in Italia, cit., p. 109 ff.