Labour market situation in Italy

Italy is the fourth lowest country for employment rates in 2021, doing better than Spain, Greece and Serbia but losing 0,2% since 2020 [source: Eurostat– Total Unemployment rate aged 15 to 74]

Nonetheless it’s important to stress how the path towards a slow and needed recovery from the most disastrous effects of the COVID19 pandemic has indeed started, even though we’re still living through it in fact, it’s been quite normalised thanks to vaccines and to a better knowledge of the virus and of its behaviour.

As we can read from the note “The labor market data and analysis” made jointly by the Ministry of Labour and Social Policies, the Bank of Italy and the National Agency for Active Labor Policies (ANPAL), “From January to October 2022, the number of employee positions in the non-agricultural private sector increased by almost 350,000 units, [...]. The dynamics of employment has weakened since summer if compared to the first half of the year (fig. 1), but has remained at growth rates in line with the pre-pandemic ones: in the two-month period September-October, 48,000 jobs were created compared to approximately 42,000 in 2019.

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 is documented through annual reports.

The aforementioned data are reinforced by the latest updated version of this year’s Labour Market Report. An integrated reading (other data can be found also on the dedicated section within the Ministry of Labour’s website) published by the Ministry of Labour and Social Policies with ISTAT, INPS, INAIL & ANPAL which gives out very similar patterns.
In the third quarter of 2022, the labour input used overall by the economic system (expressed by the hours worked in the National Accounting System) remained stable compared to the previous quarter; the growth trend continues (+2.7% compared to the same quarter of 2021), albeit at a slower pace than the dynamics of the last five quarters.

The number of employed people, estimated by the Labor Force Survey net of seasonal effects, decreased slightly and stood at 23 million 126 thousand (-12 thousand, -0.1% compared to the second quarter of 2022); the decrease in fixed-term employees (-59 thousand, -1.9% in three months) was not offset by the increase in permanent employees (+34 thousand, +0.2%) and independent employees (+12 thousand , +0.2%). The employment rate remains unchanged at 60.2% and it is stable for both gender components, for the North and for those aged 35-49; on the other hand, it is increasing in the Center (+0.4 points) and among 50-64 year-olds (+0.3 points), against a decrease in the South (-0.3 points) and among young people aged 15-34 ( -0.2 points). The unemployment rate fell to 7.9% (-0.2 points in three months) while the inactivity rate increased slightly to 34.5% (+0.1 points).”
Despite the positivity then, both reports confirm the structural slowness and undergrowth that affects the South and Young people, which are always struggling.

Such structural problems are also reflected in the data collected by the National Institute of Statistics - ISTAT, whose database on poverty tells us that the highest number of individuals who are in a situation of poverty are women aged 17-34, thus reproducing also the common and unfair gender dynamics that traditionally affect the labour market in Italy.

According to their Annual Report 2022. The situation of the country, such inequality has been registered also regarding the mortality due to COVID, which has impacted much more people from disadvantaged conditions. Going back to the labour market, ISTAT affirms that the recovery of employment involved more young people, who had been particularly affected by the crisis. It was faster for women who had lost the most and in the South, where the employment rate, albeit very low, returned to above 46 per cent for the first time since 2007. However, it should be highlighted how the labour market in Italy continues to be profoundly unequal: young people aged 25 to 34 have not yet recovered the employment rate of 2007, women in half of the cases do not work and are still at the bottom of the European ranking, with the South maintaining a huge gap in terms of employment rates compared to the North.

Main concepts

The post-crisis decade of 2008 was characterised 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 liberalisation 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]

the institution of GOL (Garanzia dell’Occupabilità dei lavoratori - Workers Occupability Guarantee) of the PNRR (National Plan for Recovery and Resilience) to be built together with Regions as part of the MISSION5 of the plan: cohesion and inclusion.(National Plan for Recovery and Resilience) to be built together with Regions as part of the MISSION5 of the plan: cohesion and inclusion.