Reforming The Labor Market

A series of reforms in recent years has liberalized Italy’s labor market and in early July as the government has introduced new legislation that will change how business is to be conducted.

The “dignity decree” aims to limit the popularity of short-term job contracts of companies shipping jobs overseas and simplifies a good number of fiscal rules. Businesses, however, have pushed back as labor unions have offered mild praise. The reform is the first bit of legislation by the month-old government and is the brainchild of Mr. Di Maio, minister of economic development and labor.

Confindustria, Italy’s main business lobby, has decried the law, stating that firms are “paying the price of an endless electoral race.” On the upside, it reintroduces an obligation on firms to justify their renewal. 

Michel Martone, a professor at Rome’s LUISS University and former vice-minister of labour, suggests that the fiscal and anti-gambling reforms are spot on, but penalizing firms that move and the use of fixed-term contracts might discourage firms from hiring and investing in Italy. Unemployment stands at 10.7%, the lowest level since 2012 but still the third-highest rate in Europe; youth unemployment is at 31.9%. 

It seems that reconciling the government’s split in opinion may then prove an endeavor more treacherous than the Palio di Siena.

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