High unemployment and companies unable to find workers. New hires and growing resignations. The Italian labour market has exhibited opposite trends two years after the start of the pandemic. Despite 2.3 million unemployed and 13.5 million inactive workers, companies are struggling to find the staff they are looking for. While redundancies in the wake of the end of the generalised lockdown in March 2020 have not exploded at all.
The mismatch between labour supply and demand is not a new phenomenon in Italy. The mismatch has existed for years due to the gap between the skills of workers and those sought by companies, which are generally more specific and technical.
“A large number of workers with low to medium skills, who could perform tasks in low value-added services, are seeking employment: however, the labour demand for these jobs is insufficient to fill the offer, which is very large”, explains the chairman of the Adapt Foundation Francesco Seghezzi. “In contrast, companies are looking for intermediate technical skills, but these are jobs that cannot be done without the appropriate skills. One worker cannot be swapped for another equally: there is a need for training and specialisation”.
For this reason, our labour market is inefficient. Consequently, many unemployed workers struggle to find a job for far too long.
These are jobs that cannot be done without the appropriate skills. One worker cannot be swapped for another equally
Hiring, firing, resignation
At the moment, and the most recent Bank of Italy surveys show, “job creation continues to be sustained mainly by fixed-term contracts, while the overall balance of permanent positions since the beginning of the year remains at about the same levels as in 2020″.
However, there were signs in September and October 2021 of a first slight increase in permanent hiring: 230,000 new contracts, in line with 2019 trends, 55,000 more than in the same months of 2020. This is encouraging, especially when combined with terminations and layoffs, which remained modest overall: the dismissal rate has not deviated from pre-pandemic levels.
“Those who feared a boom in redundancies immediately after the removal of the blockade were proved wrong“, says Seghezzi. “The numbers are in line with previous years. How can this be explained? Companies that are doing well, or even moderately well, cannot afford to lose workers at this stage precisely because of the misalignment we were talking about earlier; those that are doing badly at this point tend to have already lightened their costs, perhaps because they found alternative ways when there was a freeze on redundancies, for example by not renewing fixed-term contracts and collaboration agreements”.
Those who feared a boom in redundancies immediately after the removal of the blockade were proved wrong
A recent report by Inapp, the Italian Institute for Public Policy Analysis, shows that new contracts are mainly part-time. Over a third (35.7%) of the 3.3 million contracts concluded in the first half of this year was for part-time work. That in itself does not indicate instability. However, since in most cases it is involuntary part time, it means that it is not the worker who asks for it, but the company, hoping to save on labour costs.
Another striking phenomenon is the increase in voluntary resignations. However, the available Italian data are still too few to be able to speak of an American-style ‘Great Resignation‘. However, in theory, such a phenomenon should be viewed positively, indicating good labour mobility that runs parallel to the economic rebound, in a market where those who are already employed allow themselves the luxury of leaving their jobs in the knowledge that they will find a better one. Yet some additional doubts remain about the next step: there is a risk that a company will be unable to replace a lost worker. And as stated above, it is not exactly straightforward.
What are the prospects for the future?
It remains to be seen what, at this point, can create stability in the labour market, and what role the National Recovery and Resilience Plan can play in making the employment recovery more sustainable in the long run.
“Perhaps with new reliefs and incentives companies will be able to stabilise workers, where workers want to be stabilised: we know that this is not always the case because there are also those who have an interest in having a discontinuous career, constantly changing place and company”, says Seghezzi.
A well-run business tends to have an interest in improving quality and a continuity of workers
Finding common ground between workers and companies, however, will not be so easy. The only lasting condition for real stabilisation is for companies to work well, in all respects.
Seghezzi closes by saying that “it must be possible to access funding to innovate, increase productivity, open up to international markets and improve work organisation. A well-run business tends to have an interest in improving quality and a continuity of workers. This is precisely where the National Recovery and Resilience Plan will have to focus: by investing in digitisation, environmental sustainability and sustainable production processes, with a time horizon of five to six years, we can expect to achieve long-term structural results”.