Italian labour market improves thanks to Jobs Act

Lanciano - Italy
Lanciano – Italy

The reform introduced by Renzi’s government has improved employment and economy, albeit slightly

Interim results on the field of the reform introduced by the Renzi government – it will take time, allowing the polls, to fully assess the structural effects – tell a two-faced reality: in early 2015, when started the reduction in contributions for new hires, the rate of occupancy was 55.9 percent and that of unemployed to 12.3 percent. Today – as they said the day before yesterday to Istat – Italians who work have risen to 57.3% and those without a job fell to 11.9 percent. Around the beautiful country 417,000 employees have been added. Something moved in the right direction, one might say at first glance, thanks to the timid economic recovery. But the result of the Jobs Act is actually a cocktail of lights and shadows: in November 2016 – and it is good news – there was 409,000 permanent contracts more than in early 2015. Too bad that young people have not benefited.

The generational divide

The generational divide indeed, complicit rigidities of Fornero law that extended the retirement age, has expanded: in 23 months, the number of over fifty to work in Italy has increased by 690,000 units. The new posts for youngsters between 14 and 25 were however only 36,000. More than 500,000 of our fellow citizens, and even here there is to celebrate, are back on track to seek employment. And, discordant note, layoffs jumped by 32%, facilitated – critics say – the weakening of Article 18, which makes layoffs much more difficult. Here in detail how and what has changed in the labor market in Italy in the era of the Jobs Act:


Hiring savings of more than 8,000 euro of contributions made to run businesses have increased the the number of permanent workers in 2015, closed with activations up 56% in 2014. In December of that year, before the relief rebates where reduced to 40%, it has seen a historic passing of stable activation of certain ones. The last photo of Istat (the sadistic office of the government) portrays 14.9 million permanent employees (last November), up sharply from 14.5 million in March 2015, when the Jobs Act became effective. But behind these positive numbers lie two weaknesses. Out of a hundred permanent contracts in 2015, only 9.5% can be classified in full as new jobs. They are workers who were never registered in the INPS (the Italian Social Security) archives as autonomous or professionals, nor have ever been the subject of mandatory reports (started, stopped, extended, transformed) since 2009. The de-casualization is admittedly welcome, but then likely to fade with the loss of tax relief and a lack of sustained economic growth in recent months, the temporary hires have returned to grow at much greater rate, while with the weakening of the economic advantage of hiring the boom of stable contracts was off.


The over fifty workers are the ones that come out better from the first two years of the Jobs Act. The statistic – obviously – is a bit distorted by the effect of the Law Fornero, which raised the retirement age. The numbers are nevertheless very significant: from January 2015 to November 2016 employed workers over 50 increased by 690,000 units. Like saying that every day nearly 1,000 places were added. The reform of the Renzi government labor market, in this case, has had a marginal impact, given that the trend is a photocopy of that of 2013-2014, when in two years, workers with more than 50 years had grown to 721mila units. The unemployment rate for this age group puts Italy almost at the German level of excellence. In November last year we were at 5.6%, the lowest since 2012, half a point less than in January 2015.


The effect of the Jobs Act is almost nil for young people between 15 and 24 years. From January 2015 to November 2016 the employed in this age group grew by only 36,000 units. And in 2016, with the reduction of rebates, new posts were only 5,000. It must be said, nevertheless, that since 2004 the annual balance for those under 24 was always negative and the unemployment rate fell in two years from 40.9% to 39.4%. Even the Observatory of Labour Consultants certifies that young people (as well as women and graduates) are those that have benefited most from the increase in stable employment. In recent months, however, the youth labor market has gone back into reverse. In April, the number of employed persons in this age group had risen for the first time in 2013 to more than a million people. Since then, however, 38,000 jobs were burnt. Things are not good even for 25-34 year olds: in 2015 unemployment for them has fallen from 18.4% to 17.2%. In November, the index had already risen to 18.9%, and since the Jobs Act have been burnt over 130,000 jobs.


The new protections against dismissal (based in fact on compensation) are, according to the investment bank Barclays Bank, appreciable because companies know exactly how much can cost them to part with a worker, without waiting for the discretion of a court. HSBC Bank International recalls that the OECD credits the Jobs Act of a beneficial effect on GDP of 0.6 percentage points in five years. But it also recognizes how the companies themselves attribute two-thirds of new hires to contribution savings. A spent drug, except for a few limited cases.

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