Labour and pension legislation: a new season of reforms of Italian government
The new Italian Government, settled in August, has announced its first draft programme. According to the proclaims, the planned reforms should cut the taxes on labour - the tax wedge ("cuneo fiscale") - to the benefit of workers, and they should also provide for a fair pay level, the so-called minimum wage ("salario minimo"). The new Government announced its intention to act for implementing further pension laws overhauls: although there is no certainness so far, in the light of Prime Minister declarations, modifications to the Quota 100 current scheme are likely to be issued.
The new Italian Government, settled in August as outcome of the sudden politic summer crisis, has announced its first draft programme, which provides several substantial reforms in multiple areas such as employment, pension, industry and productivity, as well as a set of actions on fiscal policy, social equality, security, education and digitalization.
Many of the Government's policy priorities remain unclear at this stage, however the targets mentioned by the Premier in his first speech are quite ambitious. The next few months will be crucial for the implementation of the several reform plans outlined by the Government, both on the foreign and the domestic side.
As far as the domestic front is concerned, one of the main aims announced by the Government is to promote a sustainable development and boost growth also broadening the participation to the work market of segments of the population who have been not properly included so far, such as young and women, especially in the Southern Italy.
According to the Government's proclaims, the planned reforms should cut the taxes on labour - i.e. the so-called tax wedge ("cuneo fiscale") - to the benefit of workers, and they should also provide for a fair pay level, the so-called minimum wage ("salario minimo").
Furthermore, the Prime Minister pledged to implement a gradual reshaping of the tax rates for supporting medium and lower earners and also promised to boost for schools and nurseries, as well as other moves to help families and work-life balance.
According to the new Government's intentions, also young people should receive support measures, by means of training and apprenticeship programs and investments in universities and tourism.
As per the rules introduced by the latest pension law enacted in 2018 by impulse of the previous Government, the so-called "Quota 100" scheme, early retirement is an option currently available, until 2021, for employees who turned 62 years-old and accrued 38 years of social security contributions at least.
The new Government announced its intention to act quickly for implementing further pension laws overhauls: although there is no certainness so far, in the light of Prime Minister declarations, modifications to the Quota 100 current scheme are likely to be issued by the Government.
A first possible modification is the shortening of the relevant period, from the initial deadline, set in 2021, to 2020. Another option is the increasing of the 100 parameter to 101 and the threshold of the social security coverage from 38 to 39 years. A third possible way of intervention could be the increasing of the age requirement from 62 to 63 or 64 years, which would be combined with flexible social contribution requirement for reaching the 100 parameter. In this regard, the position of the social parties is that flexibility at 62 years is necessary for overcoming the rigidities of the current pension system.
The social security guidelines of the new Government mention the renewal of the so-called women's option ("Opzione Donna") and the possible introduction of a contributory guarantee pension.
In his first speech as Prime Minister of the new Government, the Premier declared that the next budget law will provide for a cut in the tax wedge ("cuneo fiscale"), i.e. the difference between gross and net salary, in particular for subordinate employees. On the basis of the hypothesis leaked so far, the first interventions on tax wedge should bring a tax relief of approx. Eur 1.500 per year for employees earning yearly salaries up to gross Eur 26,000.
The Government also confirmed its intention to enact the measure of the minimum pay ("salario minimo"), which should be equal to net Eur 9 per hour. Furthermore, the collective bargaining agreements executed by the most representative trade-union organizations should have wider extent in many sectors.
The empowering of the role of the national bargaining agreements and a new law on trade union representation are other key-actions announced by the Government for reinforcing the social cohesion in the Country.
The new Government's first declarations confirmed that the citizenship income, in place since April, will be not eliminated by the budget law but it will be ensured also in 2020. However, the Premier has not ruled out that corrective measures will be issued in order to improve the rules on the Citizenship income, particularly as for the mechanisms governing the job opportunities offer to unoccupied people.
The programmes outlined by the new Government are pretty challenging, but the actual extent of its action will chiefly depend on the financial resources available after the spending review measures which shall be laid down by the next budget law for 2020 to be drafted up by October.
In such respect, the negotiations with the European Commission for greater flexibility for debt-laden Italy will be also crucial for the implementation of the "season of reforms" pledged by the Prime Minister.