Having a job is not always a sure way to ward off poverty. There have been rising numbers in recent years in Italy and elsewhere of the so-called working poor, people who devote part of their time to work but are unable to earn a sufficient wage.
The phenomenon is widespread throughout Europe, but it is particularly accentuated in Italy: Eurostat data show that in 2019, 11.8% of Italian workers were considered poor, against a European average of 9.2%. While a fairly recent phenomenon, it is nevertheless nothing new: European data suggest that the 9.4% working poor in Italy in 2006 surged to 12.3% in 2017.
The pandemic further exacerbated this phenomenon. So much so that the Minister of Labour and Social Policies, Andrea Orlando, opted to intervene by setting up a working group of experts in economic, legal and industrial issues to analyse the causes of this situation and devise possible solutions. The result of months of study is a report comprising five proposals for action.
“First and foremost, some clarification is needed on the definition of working poverty and the indicators used to define it”, explains Silvia Ciucciovino, Professor of Labour Law at Roma Tre University and expert advisor at Cnel (National Council for Economy and Labour), who took part in the working group set up by Minister Orlando. The term working poor is internationally defined as someone claiming to have worked a certain number of months (usually seven, Ed.) and is part of a household with an equivalent income below the poverty line. The latter is usually 60% of the national median income. But this definition, which is useful because it allows comparisons at European level, is not entirely satisfactory. It fails to include anyone working for shorter periods, which is common in Italy. The risk is to completely miss the notion of impoverished work“.
According to Ciucciovino, however, there is also a second weakness:
Referring to household income, there is the doubt that the labour market hardship of the second income earner, often a woman, is not adequately taken into account.
The difficulty in establishing a definition of working poverty indicates that poverty cannot only be observed as insufficient wages, but also as a combination of various factors including hourly wages, working time and family status.
There are several causes of working poverty, the first of which is certainly contractual dumping, i.e. the possibility for companies to apply collective bargaining agreements other than the main ones which, having been defined by new and less representative trade unions, do not guarantee the same level of protection as those established by the major trade unions. “This is a recent phenomenon because until a few years ago the number of collective bargaining agreements surveyed was much lower. The current figure of over 900 collective bargaining agreements has led to a widespread worsening of working conditions”, says Ciucciovino.
The second cause is not related to the level of wages, but to working hours. Recently, a sharp reduction in the number of hours worked per capita has been noted at national level, showing that combating working poverty requires action on several fronts: Setting a minimum wage may be ineffective if it also means reduced working hours.
Professor Ciucciovino highlights the phenomenon of involuntary part-time work. “We notice this happening very often. It occurs when a worker would like to work more hours than defined by his contract. Correcting this by law is impractical because it is impossible to dictate a minimum number of hours for everyone”.
The total number of hours worked depends mainly on the demand for labour generated by the specific sector and the performance of the economic system: two aspects on which it is extremely difficult to act at a political or governmental level. “Trade unions historically dealt with these asymmetries, yet they are now going through a phase of crisis that has weakened their strength”.
Additional elements intensify the problem of working poverty, such as the increasing polarisation of the labour market, which struggles to sufficiently remunerate unskilled workers, the stagnating level of wages, and widespread career instability.
As also emphasised in the final report of the working group set up by the Ministry of Labour, only a multi-pronged strategy can effectively tackle the different causes of working poverty.
The first proposal on the table seeks to ensure suitable minimum wage levels, which can be achieved in two ways: either by extending the application of the main collective bargaining agreements to all workers in the sector or by setting a statutory minimum wage. However, both present difficulties and therefore the working group proposed a third option that would allow experimentation with a statutory minimum wage or wage grids based on collective bargaining in a limited number of sectors, where action is most urgent.
“Extending the main collective bargaining agreements to all workers is the most complicated option, but it helps to safeguard the system of industrial relations which, even if it is now in difficulty, is still a fundamental safeguard for workers’ protection. Through a law on the measure of representativeness, the strength of industrial relations and the products it can yield, i.e. contracts, would be underpinned at a legislative level”, explains Ciucciovino. “Instead, setting a general minimum wage by law would be much simpler, but would risk displacing the industrial relations system, since imposing a law from above could reduce the weight of the trade unions. It may also fail to reflect the particularities of individual sectors, not to mention that bargaining over working conditions does not only concern wage levels but also other aspects. We have therefore suggested that Minister Orlando combine the two options“.
The second proposal entails economic income support, which was one of the reasons that led to the creation of the €80 Renzi Bonus (now increased to €100). “The important thing is that the introduction of income support is accompanied by other measures such as a minimum wage. If this is not the case, the risk is that it gives the company an advantage to pay low wages because the state then steps in to supplement the income. This would pervert the company’s responsibility instead of making it accountable”, concludes Professor Ciucciovino.
The other proposals in the report seek a better collection of economic data and encourage compliance by raising awareness of the rules among workers and companies.
The report’s progress now depends on the policy, which, if it accepts the proposals, will open a second phase of in-depth analysis and technical development of the final proposal.