Evaluating the Italian Jobs Act: A social-democratic solution to Italy’s economic woes?

 

The European republic of Italy faces a difficult situation at present, confronted not only with an economy in the doldrums, but with many of its young people either without a job or having gone abroad in search of employment. But, it is also a time of great opportunity. Indeed, Italy is currently undergoing a period of major social change following the passage of the landmark Jobs Act in December; a collective series of reforms that not only provide the opportunity to rejuvenate the Italian economy, but which also offer the potential to transform Italy into a modern 21st-century social democracy.

 

One of the signature policies of centre-left prime minister Matteo Renzi, the Jobs Act aims to simplify the country’s labour code and introduce a system whereby workers’ safeguards increase with seniority, ostensibly as a means of increasing productivity and reducing the country’s relatively high level of unemployment. Currently, the rate of joblessness stands at over 13% (and even higher at just under 41% for those between the ages of 15 and 24). From having spoken to a number of Italians who have come over to England to seek work or education, I have gained an insight into how Italy’s economic situation has been regarded since the crash of 2008. I remember speaking to a young Italian a few years ago who seemed amused when I told her about a once strong Italian economy, while a shop owner I talked to back in 2013 told me that he didn’t know (in his opinion) how things could get any worse. It is possible that the Jobs Act may provide measures necessary to strengthen the economy and improve the employment prospects of Italians of all ages.

 

However, not everyone thinks that the Jobs Act is a panacea for Italy’s long-standing economic problems. Valid criticisms have been made of the scheme (which is yet to be fully implemented). Some have argued that it could lead to an increase in the number of temporary and part-time contracts while eroding safeguards for workers. Other critics have also noted that Italy already has the most flexible jobs market among industrial nations. The provisions of the legislation that have sparked much controversy include the easing of rules on employers to hire and fire workers; a proposal which, in the weeks leading up to the eventual enactment of the Jobs Act, was not only met by street protests organised by leading trade unions, but which also faced strong opposition from within Renzi’s own party.

 

It is often the case that lawmakers push through controversial measures that they feel are necessary for enhancing long-term economic prospects, even though such changes may cause a period of pain, and may prove unpopular with their own supporters and the country at large. It is especially difficult when such measures are implemented by parties of the left, who seek to uphold the tenets of equality and justice.

 

In Germany, for instance, the Hartz IV reforms implemented by the social-democratic administration of Gerhard Schroeder a decade ago (which partly involved cuts to benefits as a means of incentivising employment) are credited with strengthening the country’s economy and reducing unemployment, but at the same time contributing to the growth of the country’s low-wage sector and to greater income inequalities. Perhaps, unsurprisingly, such outcomes resulted in many social-democratic voters shifting their allegiance to the anti-capitalist Left Party in the 2005 general election, which the SPD subsequently lost.

 

In the case of Italy’s governing Democratic Party, however, it would appear that Renzi and his ministers have avoided the mistakes of their German counterparts by adding an arguably stronger social-democratic element to their economic reform programme; one that avoids cuts to benefits and which reflects the ideals and aspirations of its supporters. If one were to closely scrutinise the provisions of the Jobs Act, one would find a reform programme that represents less an emasculation of worker's rights (as various critics of the legislation consider it to be), and more a blueprint for the creation of a new social-democratic order in Italy. Not only does the Jobs Act provide for an end to unstable temporary contracts (with some 200,000 people expected to move into better employment contracts under the new law), but it also includes provisions for a system of universal unemployment benefits, universal maternity compensation for female employees, a minimum wage for those not covered by national collective bargaining agreements, and generous tax incentives for firms that employ staff on permanent contracts.

 

Also of significance to workers and their families are measures to promote union agreements which encourage flexible working patterns, improved child care and parental leave arrangements, and tax credits to enable mothers to re-enter the workplace. The introduction of tax credits by the Blair government in 1999 led to an increase in the number of women in work here in Britain, and could have a similar effect in Italy, where female participation rates are amongst the lowest in the EU. The realisation of such an initiative would not only provide a welcome boost to family incomes, but would also substantially increase revenues for the Treasury; a perfect example of “Third-Way” social-democratic politics in action.

 

These measures represent major social advances in a country that has long lacked, for instance, both a national minimum wage and a generous system of unemployment benefits. Renzi will hope that the progressive aspects of his plan will outweigh those that have caused so much consternation amongst trade unionists and politicians on the left.

 

Through the Jobs Act, Matteo Renzi has staked his political future on a programme that is only gradually being implemented, and the material benefits of which may not be felt for quite some time. The recent regional elections in Italy, which saw Renzi’s Democratic Party win just under 23% of the vote (compared to the 40.8% it attained in last year’s European elections), indicates that many voters are not only dissatisfied with the country’s slow economic recovery, but also by what various commentators see as his administration’s “business-friendly agenda.” However, the Jobs Act, when fully implemented, may not only breathe life into a moribund economy and create more employment opportunities, but also (through enhanced welfare provisions and a nationwide wage floor) bring about a greater degree of social equity in Italian society. If Renzi ensures that the Jobs Act not only reinvigorates the economy but also provides a fairer deal for ordinary Italians, then his policies may yet be vindicated. For the people of Italy, the Jobs Act may well mark the dawn of a new, more progressive era.

 

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