The debate on whether or not to abolish article 18 of the workers' statute is dividing the political class. Those in favor of abolition believe that greater flexibility in the labor market would have a positive effect on employment. Those who oppose, on the other hand, believe that the effect would be negligible and, in support of this thesis, tend to take Germany as an example, a country where firing is not easy and, despite this, unemployment is at its lowest (at 5 per cent) and even declining during the crisis years. In fact, according to the OECD index EPRC (Employment Protection of Permanent workers against individual and collective dismissal), which measures the degree of protection of employees against collective and individual dismissals (the score varies from 0, maximum flexibility, to 6, maximum rigidity), Germany is at the top of the ranking of industrialized countries, with an index of 2,98, against the 2,29 of the OECD average (Italy is at 2,79).
However, hasty interpretations of the meaning of the German data can lead to wrong conclusions. This is because, in the case of Germany, the index reflects the specific nature of its industrial relations system, characterized by the widespread presence of so-called "co-management". It is therefore not possible to "interpret" the German index without bearing in mind the role of co-management, in particular as regards the issue of layoffs and possible reintegration into the workplace. These, in summary, are the reasons.
Co-management in Germany is regulated by the Mitbestimmungsgestz, which provides for companies with more than 5 employees the possibility of setting up a Works Council (Betreibsrat), where the representatives of the workers sit, both those registered with the union and those not registered; for companies with more than 500 employees, the workers' representatives can also participate in the Supervisory Board - together with the shareholders -, to the extent of one third, a share that rises up to half of the representatives in the event that the employees exceed two thousand units .
The Works Council performs a fundamental function at the time of dismissal. The employer has, in fact, the obligation (under penalty of invalidity of the dismissal) to inform the workers' representatives and explain to them the reasons for his decision. The job of the board is to determine whether the dismissal is "socially justifiable". According to article 1 of the Kundigungsschutzgesetz, i.e. of the Law governing employment relationships for companies with more than ten employees, dismissal is valid only if based on "socially justified" reasons which may depend on the worker (for example permanent infirmity), his conduct (in the in the event of delays or repeated absences) or from the company's business (in the event of business restructuring).
Thanks to the mediation carried out by the Works Council, an agreement through the payment of compensation is found in 90 percent of cases (this is the highest percentage among industrialized countries). In the remaining 10 percent (ie in the presence of an opposition from the factory council or from the worker himself), they go before a judge. But even in this case, almost all of the cases end with a settlement. If, on the other hand, the attempt at conciliation fails, the hearing is set within a maximum of three months. The judge can choose between compensation and reinstatement, even if, in fact, reinstatement occurs very rarely. In fact, only in 16% of cases the judge opts for real protection, i.e. in cases of serious discrimination.
So how can this low reintegration rate be reconciled with the fact that the German index on the degree of rigidity in employment protection is the highest among OECD countries? The reason is simple. In calculating the index, the OECD assigns a high weight (in terms of greater rigidity) to two aspects of the German system. The first, which has already been mentioned, is that relating to the employer's obligation to inform the works council of its decision to dismiss an employee. According to the OECD, any opposition by the Council to this decision could lengthen the times of dismissal and, therefore, represent a rigidity (especially in terms of time for companies that have to adapt quickly to unfavorable changes in the cycle) that others countries have not. The second concerns the obligation for the entrepreneur (article 1 of the Kundigungsschutzgesetz), in the event of dismissals linked to the company's activity, to make a "social choice", ie to choose to dismiss workers who are less socially weak (for example, those with dependent families are less likely to be dismissed). These "obligations", at the same time exist only in German legislation, and therefore contribute to an increase in the value of the index. However, the OECD itself recognizes that this particular system of industrial relations, based on co-management, has a fundamental role in promoting conciliation between the parties.
Therefore, those who refer to the German example to demonstrate that in Germany there is greater rigidity in terms of employment protection than in Italy, are underestimating the strength of its industrial relations system. The fact that the dismissals, in 97 percent of the cases, end with the payment of a pecuniary compensation, demonstrates this.
