The “Jobs Act” and Industrial Relations: a lost Opportunity?

Following a long standing tradition in Italy that considers social partners as the only responsible for setting the rules in industrial relations, the Jobs Act did not attempt to reform the collective bargaining system. In this paper, we ask whether this waiver in reforming the industrial relations system was a lost opportunity. The current setting, which is still very close to the one emerged from the major reforms of 1992 and 1993, has been strongly criticized for its wage rigidity, in particular during economic downturns. We discuss a number of issues currently debated, such as the progressive erosion of trade unions and employers’ associations representativeness, increasing non-compliance of collective bargained minimum wages, and the emergence of ‘pirate contracts’ signed by non-representative social partners. We also review recent evidence that has focused on the impact of centralized collective bargaining along the spatial dimension, where productivity differentials generate differences in unemployment and housing costs across regions. In the concluding section we discuss some policy proposals, such as the introduction of a statutory minimum wage, the importance of measuring employers and unions’ representativeness, and the strengthening of firm-level (or territorial) bargaining.