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EACEA National Policies Platform: Youthwiki
Italy

Italy

3. Employment & Entrepreneurship

3.1 General context

On this page
  1. Labour market situation in the country
  2. Main concepts

Labour market situation in Italy

More than 10 years after the 2008 crisis, towards the end of 2019, the Italian labour market has finally absorbed the effects of two recessions and recovered pre-crisis employment levels. However, Italy remains the country with the lowest employment rate in the EU-15 after Greece: at the end of 2019, it was 59.2% (58.7% in 2007) against 69.5% in the EU-15, 68.6% of the EU-27, 56.5% of Greece, but 77% of Germany and 75.4% of Denmark, as well as 6.9% of France and 63.7% of Spain, [source: Eurostat– Employment rate 15-64 Y/O].

The positive trend of the employment rate hides the structural changes that took place over the decade; three of them are worth mentioning as documented in the 2019 Labour Market Report. An integrated reading, published by the Ministry of Labour and Social Policies with ISTAT, INPS, INAIL & ANPAL.

First:employment recovery has unevenly affected the various components of the labour market, particularly penalising young people. The recovery mainly benefited women and senior workers.

The female employment rate went from 47% in 2007 to 50% in 2019, showing that the feminization of the Italian labour market is still far from the European benchmark but gradually increasing. On the contrary, the male employment rate at the end of 2019 stood at 68.3%, more than 2% below that of 2007 (equal to 70.5%).

The recovery also benefited senior workers. In the 50-64 age group, the employment rate increased from 46.5% to 61.2%.

On the other hand, the young people employment rate is still below pre-crisis levels ​: at the end of 2019 it was 18.4% for individuals aged 15 to 24 and 32.7% for those aged 20 to 24 (against 23.6% and 39.7%, respectively, in 2007). However, the most recent data show a promising increase.

Unemployment levels are still high and so this brings the topic to the centre of the political agenda.

In the 1990s, in Italy, youth unemployment levels were ​​among the highest in Europe, around 30%. A series of targeted labour market policies and reforms, together with the transformations affecting the production system, have driven a significant improvement over the 2000s. However, the 2008 crisis once again hit young people, in particular, reducing their opportunities for accessing the labour market and getting a stable job. In 2013, the unemployment rate reached 40% among people aged 15 to 24 and exceeded 24% among those aged 25 to 29. It dropped to 30% and 18% respectively at the end of 2019, but in both age groups, it was double the European average.

The incidence of young NEETs(Not in Education, Employment or Training) also recorded values ​​among the highest in Europe. In 2019, the percentage of NEETs aged between 15-24 in Italy was 18% and 10% in Eu-27. The gap was even wider when considering the 25-29 age group: 29.7% in Italy and 17.2 % in Europe. However, it is worth mentioning that since 2014 the phenomenon has shown a decrease.

Second: employment recovery was associated with low employment intensity. The alternating phases of recovery and economic slowdown, together with the labour market reforms implemented, have contributed to the reduction in the number of hours worked and in the incidence of full-time employment, that is to the reduction in the quantity of work (even if with the same number of employed people). This trend began during the 2008 crisis, due to measures such as the redundancy fund (Cig) and have continued over the following years, due to the spread of short-hours and unstable work contracts (especially fixed-term and temporary contracts).

Over the same period, the sharp increase in employees and the decline in self-employed workers emerged together with a growing job instability for both groups. As a result, the incidence of workers with an insecure, short-term and unstable position has increased among both employees and self-employees; the latter being composed of a heterogeneous group of workers, often at a high risk of vulnerability. At the same time, full-time and permanent work have decreased, while involuntary part-time work has significantly increased, especially among women. The positive dynamics of employment for women have therefore been accompanied by a reduction in stability and number of hours worked.

Third: the evolution of the labour market structure, regarding the levels of professional qualification, shows a long-term trend towards an “asymmetric polarization”. Data show that if on the one hand the number of medium skilled white-collar workers and skilled blue-collar workers has progressively decreased, on the other, the number of managers, professionals, technicians, as well as service and sales workers, clerical support workers and people employed in elementary occupations has grown. These trends are influenced by the sectors that have driven the recovery: hotels and restaurants, transport and logistics, industry, collective and personal services; these are labour-intensive sectors, with a demand significantly oriented towards low-profile, part-time professions.

The difficulty of the Italian production system in increasing the demand for skilled labour affects the return on investment in higher education (ROI) - in terms of employment opportunities and salary levels - which in Italy is lower than the European average. In addition, young graduates risk being over-educated for the jobs they have. In 2018, the young over-educated graduates were about 1.8 million, they increased from 32.2% in 2013 to 34.1% in 2018, also due to the growing number of young people attending higher education programmes (see ISTAT, Annual Report 2019. The situation of the country).

Labour market trends and employment dynamics are constantly monitored by the Ministry of Labour and Social Policies - MLPS [cf. § 3.2] as well as by the National Institute of Statistics - ISTAT, whose database can be consulted for free and are documented through annual reports.

Main concepts

The post-crisis decade of 2008 was characterized by two far-reaching legislative interventions aimed at improving the functioning of the Italian labour market: the “Fornero reform” and the “Jobs Act”.

The Fornero reform (Law 92/2012) intervened on the pillars of labour regulation and labour policies according to the logic of flexicurity, promoting the liberalization of labour relations and the strengthening of income support measures, as well as the development of active labour policies.

The Jobs Act (Delegated Law 183/2014 and subsequent implementing legislative decrees) affected the labour market regulation and labour market policies too:

  1. regarding employment regulations, the Jobs Act further consolidated the trend of liberalisation in employment institutions prompted by the Fornero reform, with the aim of relaunching permanent employment, especially among young people. The Jobs Act established the “contract with increasing protections” (and encouraged it through tax relief for companies adopting it). The contract provides for the possibility for companies to easily dismiss newly hired employees, who in this case are entitled to a cash compensation proportional to the service period. The Jobs Act further liberalised fixed-term contracts, even if it set a limit to their use; abolished job sharing and contingent work; reviewed the legislation on part-time work, providing for the use of this type of contract also as an alternative to parental leave.

  2. Regarding social safety nets, the Jobs Act has contributed to increasing the number of workers covered by the benefits, first of all, reviewing the unemployment benefits scheme (New social insurance for employment - NASPI), introducing the Social Unemployment Insurance (ASDI) for the long-term unemployed, and a monthly unemployment allowance (DIS-COLL) for contingent workers, doctoral students and postdoctoral fellows. Lastly, it reviewed the Wage Guarantee Fund in a restrictive key.

  3. Regarding active labour policies, the Jobs Act, with the Legislative Decree 150/2015, established the National Agency for Active Labour Policies (ANPAL) [cf. §. 3.2.], aimed at coordinating the network of services for the unemployed and a single inspectorate for controls on the safety and regularity of work. Furthermore, it promoted the use of apprenticeships for the recruitment of young people up to 29 years of age.

Labour market reforms represented a fundamental piece of the Italian strategy to relaunch employment, including (but not only) youth employment, as well as contributed to defining the regulatory and institutional framework with employment policies aimed specifically at young people, which included:

  • the development of school-work experience and the development of the “dual learning model” [cf. § 3.5];

  • the implementation of a policy of economic incentives addressed to companies hiring young workers, and a significant investment in the Youth Guarantee program [see § 3.6] to counter the NEET phenomenon;

  • the promotion of forms of self-employment [cf. § 3.9].