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Investigation 16 December Dec 2019 0700 16 December 2019

One year of Decreto Dignità (Dignity decree): Istat data on the effects of the law

Employment is increasing and unemployment is falling, but the shock the government was hoping for has still to be felt, especially on permanent contracts

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One percent fewer unemployed, stable inactives and about 200,000 more workers, with an increase in permanent contracts, but also a sharp decline during recent months.

This is the picture of a year of Decreto Dignità, the legislation wanted by former Minister of Labor and Economic Development Luigi Di Maio, who in the summer of 2018 launched a reduction of the renewal of temporary contracts with the aim of stabilizing hundreds of thousands of workers.

Since then, the parts of the Jobs Act (the so-called Poletti Decree) relating to fixed-term contracts have been changed, now requiring for them to last a maximum of 12 months, which can only be extended in some specific cases. If the contract exceeds 24 months, it automatically becomes permanent (the previous limit was 36 months). At the same time, the maximum number of extensions has been reduced from 5 to 4.

The Decreto Dignità, after a transitional period, came to full capacity in November of last year. So let's review in detail the new law and the results it has produced.

The Decreto Dignità has reduced the types of short-term contracts, amending the Jobs Act

Let's start with the employed. In the third quarter of 2018, the employment rate was 58.9%. After a first drop at the end of the year, in 2019 it rose to a peak of 59.4 (in the second quarter) and then to 59.2% of the latest survey. If we look at it in terms of the number of people employed, we are talking about 23.42 million people, up from 23.21 a year ago. A change of 0.9%, but it is interesting to analyze this depending on the type of jobs.

Rather than increasing employment, the dignity decree was intended to make it less unstable. In this sense, in its first 13 months it can be said that the law has created some improvements, but has failed to cause the desired shock.

In one year, the number of employees grew (231,000) and in particular, permanent contracts increased (181 thousand, from 14.82 million to 15), with a decrease in the number of self-employed (-15 thousand). This, however, seems to be the result of the initial push of the decree, so much so that in recent weeks the trend has reversed.

In the last month alone, independent contractors have grown by 38,000, just as full-time workers have increased (6 thousand), while permanent contracts have stayed the same. In September, short-term contracts had grown by as much as 30,000 units, while permanent contracts were down (-18 thousand) compared to August, with a different trend only regarding the self-employed (-44 thousand). Overall, full-time workers increased by about 60,000 over the 13 months of the decree.

A similar analysis is possible in terms of unemployment. Overall, the unemployment rate fell from 10.7 to 9.7% over the period, with a near-stable decline in 2019. A good improvement was achieved in the 15-24 age group – the so-called youth unemployment – where it has risen from 32.7% to 27.8%, with a drop of close to 5%. Not enough, of course, but if the trend remained constant it could finally bring a problem that Italy has been lagging on for a long time back to decent percentages. The improvement in the subsequent age group, that is, the 25-34 age group, which is crucial because it includes a large part of those who have just completed their university studies, was more modest. In this case, during the period of application of the Decree there was an improvement of 2%, with a decrease from 16.2% of the unemployed to 14.2% recorded in October. Combining the first two age groups – therefore between 15 and 34 years old – there was a decrease in the unemployment rate from 20.2% to 17.5%.

Over the past year, employment has increased by about 200,000, from 58.9% to 59.2

Finally, let’s have a look at the data regarding the inactive. Overall, the number of people who don't have a job and aren’t looking for it has remained stable in the last 13 months, with a percentage that still hovers above 34%. We are talking about more than 26 million people, an increase by 25,000 in the last month and a worrying number, especially among the youngest, considering that between the ages of 15 and 24 it has increased from 4.31 million in October 2018 to 4.35 a month ago. In this regard, in addition to the decree, the previous government placed a lot of focus on the Citizenship Income, intending it not only as a welfare measure but as an active policy to create employment. The effects of the second phase of the Citizenship Income legislation – the one that should find jobs for the unemployed – will be analyzed in the next surveys.

But going back to the dignity decree, it should be emphasized that the effects were also felt in some contracts waivers increasingly applied by companies. In agreement with the trade unions, many companies have chosen to overcome the constraints – considered too stringent – on short-term contracts by signing “proximity” agreements that are valid for the company or for the individual territory in which they are applied. This is allowed by the 2011 bis legislation of the Berlusconi government, according to which these contracts can operate “even with a partial abrogation of the provisions of the law and the related regulations contained in the national collective labour agreements”.

But what about some examples? Epta (commercial refrigeration), a company in Limana, in the province of Belluno, Italy, in agreement with the unions Fim Cisl, Fiom Cgil and Uilm, has found a system to avoid laying off the 147 employees whose contract was due to expire between March 31, 2019 and April 30, 2020. Under the new rules, the company had stated that it could not keep the employees on, but working with the unions they were able to find an agreement for the extension of up to 24 months without cause of fixed-term contracts, with a path of progressive indefinite integration of workers on fixed-term contracts. At the same time, the company has committed to indefinitely transforming all contracts at the end of 24 months, raising the number of permanent contracts to at least 1,000.

A similar agreement was reached in Rome by Philip Morris, where in April a proximity agreement was drawn up which provides for an increase in the total maximum duration of fixed-term contracts (up to 36 months), contingent on the maximum number of forward contracts to 600 and guaranteeing up to five extensions, instead of 4, of the same contracts.

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