Centralisation is exhausting: it undermines wages and representation

The Italian collective bargaining system, as we have built it since 1993, has entered a crisis. The national collective agreement was intended to safeguard the purchasing power of wages by keeping them in line with inflation; the company-level collective agreement was intended to redistribute productivity and profitability where they are generated. On paper, a reasonable balance. In reality, both pillars have shown deep cracks. There was a fundamental flaw from the outset: the separation of roles was immediately rendered ambiguous by the possibility of linking average productivity – the so-called ‘sector trend’ – to the national agreement. Thinking in terms of averages means asking all companies to make the same effort, regardless of what each one produces and earns. Since that average is often flat or negative, the mechanism has not redistributed much at all. Instead, it has legitimised the idea that it is the national collective agreement that must chase profitability – a task that does not belong to it. It is the same mistake that we shall find, on a much larger scale, in the case of bank employees.

We hope that a breakthrough will be reached in the negotiations on representation and collective bargaining in the coming days. We need to establish a unified agreement covering the entire private sector, penalise delays in the renewal of national collective agreements, introduce 40 hours of training per year during working hours, and extend collective bargaining to individual workplaces, supply chains and local areas. We must not fear the certification of representation: even if, once again, the agreement does not lead to figures certified by third parties, the matter must be entrusted to the law. Workers’ prior involvement in organisational, digital and artificial intelligence-related changes must be enshrined, with the necessary skills to ensure it is not merely a formality. The 2018 ‘Pact for Manufacturing’ did not work: we need a genuine synthesis, not merely a sum of positions. Expanding the scope at national level, whilst many contracts remain below the recorded rate of inflation, is peculiar; if, moreover, technological and organisational innovation is ‘taxed’, we are heading in the wrong direction. Profits must be distributed, not investment in innovation, which should, if anything, be encouraged. Otherwise, we will only be rewarding those who do not innovate or innovation that cuts jobs.

The national collective agreement has not always managed to fulfil its purpose. Following the post-Covid surge in inflation, in Italy alone many contract renewals arrived too late, by which time the loss of purchasing power had already materialised. Contracts expire, remain unresolved for long periods, and pay rises are doled out sparingly in the following years. The result is only partial protection: in the two-year period 2022–2023, the purchasing power of wages fell by around 10 per cent, and in the market services sector, in 2023, almost two in three workers were covered by an expired contract. Industry fared better: more structured agreements, larger ‘represented’ companies, and more robust industrial relations. It is to be welcomed that the unified agreement is moving towards a guarantee mechanism such as that introduced by the metalworkers’ union in 2016. However, with the next round of renewals due in 2027, there is a risk that several sectors will lose further ground.

On the other hand, the major investment in company-level collective bargaining has not materialised and has not produced the promised leap in scale. There are excellent agreements in excellent companies: performance-related bonuses, welfare schemes, arrangements on working hours, training, work-life balance and employee participation. But decentralised collective bargaining still applies to only a minority of the labour market. Depending on how it is measured, it covers between one-fifth and one-third of private-sector workers and a much smaller proportion of companies. It has reached a ceiling beyond which it cannot go. It is not enough to simply call for ‘more company-level agreements’: a productive structure made up of a vast number of small businesses and patchy trade union representation prevents that model from becoming widespread.

The underlying problem is confusion over roles. The national level should set a common minimum standard and provide protection against inflation; the company or regional level should distribute gains in productivity and profitability where they exist. When the two levels overlap, the system breaks down: the national level pursues objectives that are not within its remit, whilst the company level remains weak precisely where it should be decisive. Platforms are built that are far removed from actual outcomes; when it comes to signing agreements, these are disguised by extending the duration of contracts and, all too often, by cutting key benefits, starting with supplementary healthcare.

It is often said: “Workers pay more attention to the zeros in pay rises than to those in inflation figures”, but this is a short-lived illusion given that we are the worst-performing country in the OECD, with a 6.1 per cent decline in real wages. This means that national collective agreements have failed to protect against inflation. This is even more true for the poorest households, who have been hardest hit by the ‘shopping basket’ cost of living (+24 per cent since 2021), which has risen far more sharply than the IPCA. In times of crisis, the social partners tend to retreat into centralised bargaining: this is ineffective when it comes to wages, weak in terms of extending representation, and lacks even the media visibility it once had. This is not a conspiracy; it is a convergence of interests. For one section of the trade union movement, it safeguards a political role; for many companies, it avoids workplace participation, which would involve scrutinising financial statements and organisational structures.

Companies prefer to rely on the National Collective Labour Agreement (CCNL) for two reasons. Firstly, even in large companies, there is often a preference for basing almost the entire wage on the national agreement, leaving matters to the company-level agreement which, however, do not pass on productivity gains to wages. Secondly, in a great many companies, there is no trade union, or it is too weak to negotiate effectively. There is a lack of representation, a lack of information, and a lack of technical expertise to analyse financial statements and key performance indicators. Without these tools, the company-level agreement remains an abstract concept. Then there is an organisational issue: the trade union must redirect resources towards its true front lines, in the workplace and across the local area. A reform is needed that brings together the various categories and rebuilds expertise in work organisation, financial statements, productivity, bonuses, contractual clauses and technological innovation – not just formal assistance.

For SMEs, the regional collective agreement must be taken seriously as a genuine supplementary framework for sectors and regions where individual companies are too small to negotiate. Regional indicators are developed based on specific characteristics and productivity challenges, but enforceability must then be guaranteed on a company-by-company basis depending on the firm’s financial health. There are also those who argue that a second-tier agreement (whether company-level or territorial) should be made mandatory by law, but without any overlap between the tiers. The point is not to weaken the national collective agreement. On the contrary: it must be restored to its founding function as a framework providing guarantees, universal coverage, protection against inflation, common rules and extension to public procurement contracts. But it falls short on the redistribution of profits. Unless we rebuild this division of labour, we will continue to have national collective agreements burdened with too many expectations and company-level agreements that are far too infrequent. And wages, particularly in the service sector, will continue to pay the price for a system that promises two tiers but only manages to make one of them work – and poorly at that. A system that fails to keep pace with inflation.