BREAKING NEWS

BREAKING NEWS

Italy's new labour law explained

Now Reading:

Italy's new labour law explained

Italy passes new labour law. Pictured: labour Minister Luigi Di Maio
© Copyright :
Reuters
Text size Aa Aa

On Tuesday, the Italian parliament passed legislation that would tackle short-term work, precarious labour practices and penalise firms for relocating abroad.

The new wide-ranging law, called the “dignity decree”, is one of the first victories for the left-right coalition government between the 5-Star Movement (M5S) and the League.

It was approved in the Italian Senate with a 155-125 vote, with one abstention.

What is changing?

Curbing short-term work contracts

Stopping the abuse of short-term work contracts has been a campaign promise of Labour Minister, Luigi Di Maio, leader of the radical M5S.

With a looming unemployment rate of 10.9%, and nearly 20% in the south of Italy, Italians are looking for some semblance of job opportunity and security.

This law is a response to former prime minister, Matteo Renzi’s "Jobs Act" that introduced a permanent contract that made it easier for employers to lay off workers within the first three years, in the hope of boosting jobs.

Many employers took advantage of this: so far, 394,000 temporary jobs were created since June 2017. But there was reduction of 83,000 permanent contracts.

Now, the new law hopes to discourage short-term contracts by reducing the number of times you can renew these contracts from three to two years.

As an incentive, firms that employ workers under the age of 35 in 2019 and 2020 will be granted a reduction in the labor taxes they must pay for each worker for the first three years of their employment, up to a maximum of €3,000 per year.

Penalising firms that move production abroad

The new law will ask for refunds from companies that have relocated outside Italy within five years of receiving government funds – the refund could cost up to four times the amount received.

Cracking down on gambling adverts

The law places a ban on all gambling advertising starting on January 1, 2019, with non-compliance fines starting at a minimum at €50,000.

This will include most media platforms – websites, radio and television.

Sports clubs will be prohibited from carrying sponsors from the gaming industry. This could mean millions of euros of lost revenue, according to ESPN, who said Italians spent €101.85 billion on gambling in 2017.

Response to the “Dignity Decree”

Several months back when the new law was proposed, Renzi called it the “Unemployment Decree”, saying it would cause tens of thousands of job losses.

Fearing the new law may be too rigid, the government offered small firms in the agriculture and hotel sectors the option to pay temporary workers by a voucher system, rather than using a formal contract.

A poll by the IPSOS agency showed support of 55% to 75% for the measures in the decree, with the strongest backing for the penalties on firms moving production abroad, higher compensation for wrongful dismissal and the ban on gambling adverts.

During its passage through parliament, the government also introduced financial incentives for companies to hire young people on open-ended contracts. Firms that employ workers under the age of 35 in 2019 and 2020 will be granted a reduction in the labour taxes they must pay for each worker for the first three years of their employment, up to a maximum of €3,000 per year.

What’s the consequences of this law?

The new law shortens the maximum duration of temporary employment contracts and decreases the number of times an employer can renew such contracts. But a recent report by Italy's social security institute suggested that thousands of workers will lose their jobs.

Other EU nations changing labour laws

Last May, French president Emmanuel Macron signed five decrees overhauling France’s labour laws that make it easier for companies to hire and fire employees. Provide more flexibility in negotiating wages and contracts and streamlining workers’ committees within companies. Things are shaking up across the EU, as governments begin to re-think their labour policies in 2018.