The economic policy news that received the most comments last week was provided by the OECD with reference to one of the most well-known and praised critical issues of the labor market in Italy: the salary catchphrase that don't grow. According to the Report of the Organization of Industrialized Countries, theItaly is the only country of the European Union to have registered a negative change of real wages between 1990 and 2020. If we then consider the relationship between prices and wages today we earn less than in 1990. Analyzing, however, the period between 2019 and 2022, the average annual wage of each worker Italian decreased by approximately one thousand euros. In other words: if in 2019 the average salary was around 43 thousand euros, in 2022 it dropped to 42 thousand euros. In the three-year period, therefore, Italy recorded a overall decrease of -3,4% in wages. This condition is denounced by left-wing political and trade union organizations as if it were a responsibility to be attributed to the centre-right government and - according to some more radical people - also to previous centre-left governments ''deviated'' from neoliberalism, so much so that the CGIL is collecting signatures to submit the ''culpable'' rules to a referendum to repeal them.
Naturally, by gleaning among the various reports, focuses and comments there is a way to find some explanation founded on the reasons that have determined that stalemate in wages which is ending up in the tail of a lower effective purchasing power which has now become structural.
We should reflect on the reasons that contributed to the stagnation of wages.
Because wages have fallen
Since 2000, thetrend in labor productivity (which is not a problem that affects only workers) was almost stationary while that of major economies of the G7 continued to grow, marking a maximum distance reached in 2021 of 23,7 percentage points. Another critical issue lies in the structure of the collective bargaining which in Italy continues to be centralized and that is centered on the first level (the national category contract). The difficulty of fully deploying the two-level collective bargaining model remains. Thus, if the cornerstone of the contractual structure lies in national sectoral bargaining (even the unions have taken a step back in this direction after having attempted to throw their hearts over the obstacle with decentralized and local bargaining which is also favored at a fiscal level if aimed at certain productivity and participation objectives) it is clear that the salary review is carried out at excessively long deadlines in line with the start and expiry of the contracts themselves and the times necessary for their renewal. If on average the vacation time is equal to 32 months, in some sectors years pass while in the meantime the cost of living undergoes variations in shorter periods of time which make the amount of wages previously agreed upon inadequate in the context of different conditions.
The problem of the tax and contribution wedge
Just think of the upheavals that have occurred in recent years with the pandemic crisis first and the war in Europe then, with all the consequences on the costs of raw materials and energy supplies and on international trade. Then there is the question of the tax and contribution wedge, to reduce which, although temporary, important interventions have been carried out, but which remains higher than in the Euro Area for all workers except for low-income singles, for whom the tax wedge is in line with the Euro Area and would be even lower including the 80 Euro Bonus.
Il gap is widening further if we consider a simple average of the ten largest Euro Area countries: the wedge for a worker who earns the average wage and has three dependent family members is 5,4 points higher than the average of these countries. This fiscal disincentive has decentralized bargaining hijacked towards widespread experiences of corporate welfare, whose tax treatment is certainly more advantageous for both the company and the workers, but which does not turn into a ''free lunch''.
The 2024 budget law
The government in budget law 2024 he intervened on the wedge both on a fiscal and contributory level. The Parliamentary Budget Office (PBO) has calculated the effects, represented in the graphs below.
La decontribution produces on average for all taxpayers up to 28.000 euros a substantially homogeneous percentage increase in income, just over 2 percent. The effect is conditioned by the presence within the income classes of individuals who do not benefit from the tax exemption as they are not employees. The homogeneity of the incidence is reflected in a greater benefit in absolute value for the higher income classes.
The Irpef reform
The Personal income tax manifests its effects significantly in the 15.000 - 28.000 euro class, adding to the effect of the decontribution, guaranteeing the subjects included in this range the highest overall advantage, both in absolute terms and compared to the basic income. Irpef, however, shows its most significant effects in the next class, where, however, the decontribution has already significantly reduced its effects. For the class over 50.000 euros of taxable income, the benefit has a very limited impact on income (around 0,2 percent, a significantly lower value than that found in the other classes). There Irpef reform, in fact, guarantees a fixed benefit of 260 euros, reduced for those who have deductible expenses other than healthcare expenses. The most significant effect of decontribution is on workers, who are guaranteed an increase in income of approximately 3,4 percent, while for the overall category of employees the same percentage stands at 1,9 percent, also because not everyone benefits from the measure. For both categories of workers, a greater impact of the benefit on income emerges for those with lower incomes who correspond to homogeneous benefits in absolute value.
The intervention on Irpef instead has mirrored characteristics, with a less progressive effect: the percentage increase in income is homogeneous, while the absolute increase rewards employees. The other categories, not affected by the decontribution except marginally in the case of individuals with multiple types of income, substantially benefit from the reduction of the Irpef. For the pensioners the incidence of the benefit and, to a relatively greater extent, the absolute benefit are lower than those of workers and employees.
Then follow some considerations regarding the beneficiaries which contradict what one would be led to think based on the clichés that infest the analyzes of economic and social facts. According to the authoritative UPB, the decontribution guarantees a higher percentage increase in income for part-time employees compared to full-time workers, who are instead rewarded more by the Irpef reform. Finally, it should be noted that the decontribution guarantees support significantly higher among younger people, especially in the class up to 35 years of age. Although the differentials are much less pronounced, i young people are more advantaged in relative terms also in the case of the Irpef reform. The different redistributive scope of the two institutions is manifested, even if to a barely perceptible extent, in the gender differentials in which women are rewarded in terms of the incidence of the benefit.
