From the beginning of 2014 to mid-2016, employment pointed upwards, with an increase that varies between +2,3% and +2,9% depending on the indicator used to measure it. The growth in employed persons (+651 thousand) was driven by the employee component. 84% of the increase in employee employment recorded in 2015 (+288 thousand units) occurred with permanent contracts; of the additional 210 jobs gained in the first 9 months of 2016, almost two-thirds are permanent.
The increase in employment almost entirely took place in private services while the massive loss in industry in the strict sense was not recovered (still 715 fewer employed persons in the third quarter of 2016 compared to the end of 2007). There has also been an expansion of job opportunities for young people: the employment rate of 25-29 year olds increased by 3,8 percentage points from the end of 2013 to mid-2016, that of 15-24 year olds by 1,7 points.
The information available for the second half of 2016 indicates that the rise in employment has come to a halt, including that of employees in the last quarter of the year. How much of these trends can be attributed to the Jobs Act and/or temporary tax exemptions? It is too early to give a conclusive answer. The recent stagnation in employment is at least in part explained by the process of lengthening the working hours which, until it is exhausted, will dampen the creation of new jobs.
I work up until mid-2016, not just the hours but also the heads
From the beginning of 2014 to mid-2016, employment pointed upwards regardless of the indicator used to measure it: not only did the ULA increase (+2,4% from the last quarter of 2013 to the summer of 2016) and the number of hours actually worked (+2,9%), but also, at the same time and with similar intensity, the number of people employed (+2,3%), contrary to what one would have expected (Chart A). Indeed, in the two recessions (2007-2009 and 2011-2013), companies cut their workforce, but also reduced the hours worked, cutting overtime, using part-time or other forms of temporary reduction of working hours and resorting to the redundancy fund; this meant that the AWU and the number of hours worked fell much more than the number of people employed.
Symmetrically, as happened in the past, the large pool of underutilization of the employed (in terms of hours worked per capita) would have dried up with the increase in activity and this could have slowed down the increase in employed persons.
CIG almost on pre-crisis levels but not yet the timetable
In fact, recourse to the CIG has gradually decreased since autumn 2012 and the total equivalent full-time work units involved have dropped from almost 400 thousand to less than 140 thousand. Nonetheless, per capita hours worked are still very low compared to pre-crisis values: in the third quarter of 2016 in Italy each employee worked on average 1 hour and a half less per week than at the end of 2007, from a minimum point of around two hours less touched at the beginning of 2013 and maintained until the beginning of 2015.
The decrease in per capita working hours was already underway before the crisis (-1 hour a week from the beginning of 2000 to the end of 2007), therefore part of the decrease observed in recent years is structural, linked to the increase in female employment and in services, with a greater diffusion of part-time work. However, from the data of the ISTAT survey on the Labor Force, it can be observed that the increase in the share of employed with part-time contracts, from 14,0% at the end of 2007 to 18,6% in the third quarter of 2016, is entirely attributable to expansion of the involuntary component (which alone rose from 5,5% to 11,4% of total employment). As the recovery of the activity consolidates, involuntary part-time will decrease, leading to a lengthening of the working hours per capita which will dampen the creation of new jobs.
Employment hitherto driven by permanent contracts…
Breaking down the growth in employment by type of contract, it can be seen that in 2014 hiring was distributed via an increase in fixed-term contracts. This is in line with the greater reactivity of the temporary component of employment to the trend of economic activity – greater reactivity which has characterized the Italian labor market, at least until the most recent regulatory interventions. With the transitional introduction of the tax relief on permanent hirings (since January 2015) and the introduction of the contract with increasing protections (since March 2015), a conspicuous increase in permanent employment has been observed, which has driven the growth of total employment, largely replacing temporary employment and offsetting further declines in independent employment (almost 500 units lost since the end of 2007, of which 85 since the beginning of 2014). In fact, 84% of the increase in employee employment recorded in 2015 (+288 thousand units in December over December 2014) occurred with permanent contracts; of the additional 210 jobs gained in the first 9 months of 2016, almost two-thirds are on open-ended contracts (in 2014 the figure was a quarter).
… and on the rise in private services
The increase in employment recorded since 2014 has almost entirely occurred in private services (+626 thousand units in the third quarter of 2016 compared to the fourth quarter of 2013, +616 thousand compared to the end of 2007). Since the end of 2015, slight gains in employment have also been observed in industry in the strict sense (+42 units), which, however, have barely touched the massive loss recorded in previous years (still 715
less busy). In construction, on the other hand, the process of expulsion of manpower did not stop (506 units lost overall).
Change of course for job opportunities for young people
Considering the employment trend by age group, it can be observed that the recovery of the labor market since 2014 has also affected young people who, in Italy as in other countries, have been the hardest hit by the crisis. The share of employed people aged 25-29 fell by 13,9 percentage points from the end of 2007 to the end of 2013; that among 15-24 year olds by 8,1 points. The employment rate of 55-64 year olds in the same period, on the contrary, rose by 10,4 points and by another 6,5 in the last three years, continuing a trend already underway since the early 25s and explained by behavioral changes and pension system reforms. With the restart of the demand for labor, the employment rate of 29-3,8 year olds increased by 2013 percentage points from the end of 2016 to mid-15, that of 24-1,7 year olds by 30 points (Graph B). This also happened thanks to the contribution reduction incentive: of the new employment relationships activated via open-ended contracts involving the under 2015s, around two thirds benefited from the lower contribution both in 9 and in the first 2016 months of 57,7 , against an average incidence of exempt hires equal to 48,2% and XNUMX% respectively (Table A).
