La riforma della contrattazione:

redistribuzione perversa o produzione di reddito?

by

Riccardo Leoni and Nicola Acocella

Presented by

Matteo Foiadelli, Paolo Viganò and Fabio Invernizzi

1. Historical context

2. ’93 July agreement and

abolition of sliding scale

3. 2009 agreement

4. Indexation

5. Static model

6.Productivity

7. Decentralised bargaining

8. Equalising economic element

9. Alternative ideas.

10. Patto sociale

per la produttività e

la crescita

11. Conclusions

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During italian economic boom:

productivity increase,unemployment decrease.

Inflation remain constant.

After “autunno caldo”and during 70’s:

productivity doesn’t increase,unemployment doesn’t decrease,wages increase.

Inflation increase.

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!12,34+5,*6(..7.-&,*-8,

*9'+$&$'-,':,%+$8$-6,%)*+.

Objectives:

Improve productivity

Calm inflation

Create social cohesion between social parts

Structure:

National bargaining: indexation

Decentralised bargaining: productivity

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0;;1,*6(..7.-&,

Change:

3 years duration

Indexation system

Introduction of equalising economic element

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=-8./*&$'-

PROBLEM #4Decentralised bargaining

PROBLEM #1“Significative” inflation

PROBLEM #2HICP

(harmonised index of consumer prices)

PROBLEM #3Wage indexation

PROBLEM #1“Significative” inflation

.,"$/$-0$&,-&,-1"+,(-&/"+$

real inflation rate

(t+3)

Expected inflation rate

(t)

Significative inflation is contracted between labor union and employer’s

federation

Significative inflation is contracted between labor union and employer’s

federation

Significative inflation is contracted between labor union and employer’s

federation

23,#-,40"+,'$5&,-1"+,(-

Inflation part not recovered

PROBLEM #2HICP

(harmonised index of consumer prices)

>-.(65,6''8%

NOT CONSIDERED

Represent 0,2‰ of HICP

From 2000 to 2008 +16% for year

?@$&&$,A64(*&$B$C

The 81,2% of italian family live in his own house.

NOT CONSIDERED

Family has to spent part of the incomein order to renovate home

D$".(.-&,$-)'7.%

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'()*#&)

NOT CONSIDERED

E'F,:(.G4.-)5,

)'-%47.8

Low inflation rateor deflation

#$6H,:(.G4.-)5,

)'-%47.8

Hight inflation rate

6-"77/(7/,"+$&869:

Inflation part not recovered

PROBLEM #3Wage indexation

18,7 !/h

WAGE

1993 X EXPECTED INFLATION

RECOVERED INFLATION=

15,6 !/h

WAGE

2009 X EXPECTED INFLATION

RECOVERED INFLATION=

-12,6%

;"#$&,-<$="+,(-

Inflation part not recovered

PROBLEM #4Decentralised bargaining

.$0$-+/"),%$<&>"/#",-,-#

1st level Inflation

recovered

2st levelInflation

not recovered

Decentralised bargaining represent 10% of wage

Real value of incentive could decrease over time

.$0$-+/"),%$<&>"/#",-,-#

Inflation part not recovered

PROBLEM #4Decentralized bargaining

PROBLEM #1“Significative” inflation

PROBLEM #2HICP

(harmonized index of consumer prices)

PROBLEM #3Wage indexation

I"

J&*&$),7'8.+

! = base salariale indicizzata

" = valore economico del punto per l’indicizzazione

# = restituzione delle differenze significative

peu = tasso di inflazione ufficiale prevista

$ = incidenza dei beni energetici

peuBE = tasso di inflazione ufficiale prevista relativa ai beni energetici

% = rapporto fra inflazione percepita e ufficiale

pEU = tasso di inflazione ufficiale effettiva

pEUBE = tasso di inflazione ufficiale effettiva relativa ai beni energetici

Wnd = tasso di variazione del salario connesso alla contrattazione decentrata o

all’elemento di garanzia retributiva

1. Used indexation system is fair

2. With estimated variables is unfair

3. Would be necessary increase decentralised wage

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N('84)&$B$&5O

COMPETITORS

DEALY

* Trend productivity 1995-2005

-1.1%*+12.1%

+12.1%

+13.2%

E$&.(*&4(.!%,(.*%'-%,

Lack investement in ICT

trend is similar with competitors

Rigidities in labor market

contrast with European Commission (Empowerment)

Little firms and Specialization in traditional sectors

explain only 18% of gap in productivity (Foresti et al.)

WAGEPRODUCTIVITY

WAGEPRODUCTIVITY

P*(6$-*+$%&,&H.'(5Wage rapresent remuneration of the marginal productivity of labor.

WAGEPRODUCTIVITY

P*(6$-*+$%&,&H.'(5

Productivity increase when employers increase effort.

WAGEPRODUCTIVITY

WAGEPRODUCTIVITY

QH.'(5,':,J5+'%,E*9$-$

Unions bargain wage’s increasement.Profits decrease.

WAGEPRODUCTIVITY

QH.'(5,':,J5+'%,E*9$-$

Firms are oblidge to make innovation in order to maintain the original level of profit.

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L('A&,%H*($-6

PROFIT

After 3 years organization performance is evaluated

L('A&,%H*($-6

BONUS

Employeds received a share of profit

=-N4&,

'($.-&.8

COMPETENCE

S4&N4&,

'($.-&.8ROI

COMPETENCE

?

BONUS

T*)UF*(8,

+''U$-6

ROIT*)UF*(8,

+''U$-6

=-).-&$B*&$'-,%5%&.7,

8'.%-!&,F'(U

L($).V1000! ROI

L($).V2000! ROI

In order to reach their goal firm could increase price without increase productivityif demand is anelastic

L($).V2000!In order to reach their goal firm could increase price without increase productivityif demand is anelastic

ROI

ROI

If one firm share a part of new profits

the real wage of employee increases

MH*&,H*NN.-%,

FH.-,.B.(5,

A(7%,8',$&O

ROI ROI ROIROI

INFLATION

ROI ROI ROIROI

REAL WAGE DOESN’T INCREASE

W"

>G4*+$%$-6,

.)'-'7$),.+.7.-&

WAGE WITHOUT

DECENTRALISED BARGAINING

WAGE WITH DECENTRALISED

BARGAINING

SOCIAL EQUITY

WAGE WITHOUT

DECENTRALISED BARGAINING

WAGE WITH DECENTRALISED

BARGAINING

SOCIAL EQUITY

WAGE + EQUALISING ECONOMIC ELEMENT

WAGE WITH DECENTRALISED

BARGAINING

SOCIAL EQUITY

W"0

>G4*+$%$-6,.)'-'7$),

.+.7.-&"!"#$%&'(

S4&N4&,

'($.-&.8ECONOMIC

CYCLE

SKILLS

?EQUALISING ECONOMIC ELEMENT

T*)UF*(8,

+''U$-6

EQUALISING ECONOMIC ELEMENT

Based on 4 previous years

Today

Supply after 3 years (at the end of the contract

validity)

DECENTRALIZED BARGAINING

Fiscal incentives

Cost of bargain for the firm

EQUALISING ECONOMIC ELEMENT

Fiscal incentives

Absence of bargain cost for the firm

Bargain at national level

UNILATERAL INDIVIDUAL

BONUS

Fiscal incentives

Without bargain

No minimum bonus

DECENTRALIZED BARGAINING

EQUALISING ECONOMIC ELEMENT

UNILATERAL INDIVIDUAL

BONUS

EXCLUSION OF UNIONIZATION

1"!

X+&.(-*&$B.,$8.*%")*+&*,-./,-#*0(1(,&'2

BONUS

BONUS

SKILLS

VALUTATION

@'(F*(8,

+''U$-6

1"0

X+&.(-*&$B.,$8.*%"345/%-(-*60&+#*#'-+0

&%&'&*,2

Based on 4 previous years

Today

Supply today

@'(F*(8,

+''U$-6

!;"

L*&&',%')$*+.,

N.(,+*,N('84&&$B$&Y,.,

+*,)(.%)$&*

COMPLEMENTARITY

ICT

ORGANIZATION CHANGE

NEW WORK PRACTICIES

COOPERATION

GOVERNMENT

UNION LABOREMPLOYERS’FEDERATION

SIGN A

PROTOCOL AT

NATIONAL LEVEL

GOVERNMENT

UNION LABOREMPLOYERS’FEDERATION

GOVERNMENT

AS EMPLOYER FOR PUBLIC SECTOR:IMPLEMENT NEW WORK

PRACTICES AND

NEW FORM OF ORGANIZATION

GIVE FISCAL INCENTIVES ONLY TO FIRMS THAT ADOPT THEM

SIGN A

PROTOCOL AT

NATIONAL LEVEL

GOVERNMENT

UNION LABOREMPLOYERS’FEDERATION

EMPLOYERS’FEDERATION

IMPLEMENT NEW WORK PRACTICIES

AND NEW FORM OF ORGANIZATION

BARGAIN OF OBJECTIVE

SIGN A

PROTOCOL AT

NATIONAL LEVEL

GOVERNMENT

UNION LABOREMPLOYERS’FEDERATION

UNION LABOR

COOPERATION AT FIRM LEVEL IN ORDER TO INTRODUCE NEW PRACTICIES

AND OBTAIN FISCAL INCENTIVES

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