Italy's young victims of broken labor market

ROME (Reuters) - They are called the “precari,” or “precarious ones” -- Italians in their twenties and thirties armed with ambition and often excellent academic degrees who have spent their entire working lives in poorly paid temporary jobs.

They are the rule, not the exception, in a country where young people are hardly ever given regular work but instead move from one 6-month or one-year contract to another.

In some ways they are lucky to have work at all. Only one Italian in five under the age of 25 has a job, along with Greece, the lowest youth employment rate in the euro zone. Italy’s overall employment rate, at 57 percent, is the second lowest in the area after tiny Malta.

When Luca Di Bonaventura graduated in political science from Florence University in 2001 he had high hopes of a career in journalism.

Now, after a decade of 6-month contracts with major Italian news agencies, earning between 600 and 1,500 euros per month, he has applied for jobs as a traffic warden and bank teller.

“I’d be a doorman in a hotel. I would take any job tomorrow if it offered me a regular contract with sick pay, holiday pay, anything that gave me the chance to plan my life.”

Simona Allegretti is 37, has a degree in Italian literature and works in a school for hairdressers after years of temporary jobs as a teacher and working in a call centre. She earns 15 euros an hour and has no contract or employment protection.

She abandoned her quest for a teaching career in Italy’s state system after years of occasional work as a poorly paid substitute. Less than one percent of regular teachers are under 35, and these are virtually unheard of in secondary school.

New Prime Minister Mario Monti has pledged that labor reform will be a top priority of his new technocrat government, brought in earlier this month to battle a debt emergency that threatens the whole of the euro zone.


It wasn’t always like this. Until the mid-1990s temporary jobs were a rarity in Italy, and in any case carried similar levels of benefits as regular work.

When new types of temporary contracts and agency work were introduced they were widely hailed as a vital injection of flexibility in an ossified system. Now there is a consensus, even among economists and at Italy’s central bank, that things have gone too far.

Nine out of ten first jobs are now taken under a temporary contract, whether the worker is an unskilled laborer or a graduate. Starting salaries, in real terms, are at the same level as in the 1980s.

The system is failing because companies take advantage of the much lower labor costs associated with these contracts by renewing them as often as is allowed and then simply substituting the temporary worker with a new one.

So temporary work that was supposed to be a stepping stone to a stable job is leading nowhere. Workers either return to unemployment or struggle for years with unstable work. “Precari a vita,” or “precarious for life,” has become a common term.

Moreover, unlike in many European countries, most unemployed Italians cannot rely on government benefits or access to programs to help them find a job.

“Without the prospect of even gradual stabilization of temporary employment the quality of human capital is weakened, with long-term negative effects on productivity and profitability,” former Bank of Italy Governor Mario Draghi, now head of the European Central Bank, said in a recent speech.


Abuse of the temporary contract is only half the story, however.

One reason why firms are so reluctant to hire workers on regular contracts is because once they have done so it is almost impossible to fire them.

“We have to get away from a dual labor market where some are too protected while others are totally without protection or insurance in the case of unemployment,” Monti said in his maiden speech to parliament.

These “too protected” workers populate the public sector and companies with more than 15 employees. Here workers benefit from rigid rules offering strong guarantees and, especially in the public sector, a job for life.

Workers in firms of more than 15 employees are protected by article 18 of a labor statute drawn up in the 1970s.

It states that a worker can only be dismissed for gross misconduct, and unless this is proved he must be reinstated with payment of full salary for the period of lost employment, as well as legal costs while the case was being judged.

The fact that it only applies to companies above 15 employees was originally to protect trade unionists from arbitrary dismissal, but it has created a major disincentive for small companies to grow, damaging Italy’s industrial structure.

While firms have great difficulty shedding single workers, they can close an entire branch of production if they can show that the company needs to restructure due to economic crisis.

“Paradoxically, in Italy it is far easier to fire ten workers than to fire one,” said labor expert Piero Ichino.

Monti will not get union support for any easing of firing restrictions unless he also introduces a comprehensive system of jobless benefits, something he told parliament was sorely needed but which will be hard to finance in current circumstances.


Even if the new prime minister can hammer out a consensus on hiring and firing, his task of reforming the labor market will be far from over. Debate is already raging over another contentious issue: collective bargaining.

Car maker Fiat, Italy’s largest private industrial group, has led the way by ignoring industry-wide national agreements and striking deals at the plant level to set tougher rules on working hours, sick pay and strikes.

Ichino said Fiat’s example, which is being followed by other large groups, “marks a turning point in Italy’s system of industrial relations.”

The move towards contracts that take more account of company and regional differences is opposed by many on the left and has split the country’s trade unions, but Monti made clear that he sees it as the way forward.

“We intend to continue to move the focus of collective agreements to the company level, as the European institutions ask, and as the social partners have already begun to do,” he said.

Chiara Di Lorenzo, 31, from Naples, is hoping the reforms will give her a better chance of finding a job worthy of her masters degree in international co-operation and development.

She is still looking for stable employment after a chain of part-time, temporary and sometimes unpaid jobs working with refugees, non-profit organizations and Rome University.

She helped set up a Facebook group called “Network Precario,” whose 900 members try to help each other in the search for “real” work. But morale is low.

“There are hardly any funds for co-operation and development in Italy, so there isn’t much hope unless you know someone who counts,” she says.

Editing by Sonya Hepinstall