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Wages, it is not up to the judge to establish adequacy: what matters is solving the crisis of industrial relations and bargaining

A very questionable jurisprudential orientation is increasingly taking shape, which entrusts the magistrate with establishing the appropriateness of wages. But this is not the main way to improve them

Wages, it is not up to the judge to establish adequacy: what matters is solving the crisis of industrial relations and bargaining

There is a joke that's good it suits the topic that we intend to address. A millipede is burdened by mobility problems because every day - for some reason - he has a leg that hurts. He then decides to go to the owl, the wise man of the woods, and ask for his advice. The owl - after listening to the story - takes a few minutes to think about answering: "It's a question - he says - of probability calculation. With all the feet you have, you have a very high risk of becoming lame. You should become a chicken; so – with only two legs – you would reduce the probability to 50%”. Enlightened by such wisdom, the centipede immediately asks for explanations on how to achieve the suggested transformation. And the owl replies: “My dear, I have shown you the line, you have to provide for the technical aspects”.

In Italy, for a long time and in all circumstances, we have been telling ourselves that wages are low (as, moreover, is certified by the competent international bodies). For the sindacati the theme has become the "Valtellina redoubt" after they are no longer able to flaunt (because they are contradicted by trends that are stabilizing in opposite directions) the "rampant precariousness", so much so that their leaders make use of the following analysis at every turn: "It's true, employment is growing, but wages are low".

Draghi's warning: "The European economic model must change"

Lastly – with all the weight of authority that it carries with it – also Mario Draghi has returned to the subject, even taking it into the context of a different economic policy which should be at the heart of the European Union's initiative if it wants avoid an inexorable decline within a quarter of a century. Speaking in Paris at the Centre for Economic Policy Research's Annual Symposium (Cepr), the former Prime Minister argued that, faced with a China less favorable to European producers and the risks of a protectionist rise by the new American administration led by Donald Trump, theEurope must change its economic model, today based mainly on the export. “European policies have tolerated low wage growth as a means to increase external competitiveness, aggravating the weak income-consumption cycle, with the renunciation of using fiscal space to counter weak internal demand”. But today – Draghi underlined – this economic model based on external demand and low wage levels “it is no longer sustainable”. In essence it is necessary create the conditions to strengthen the internal market to make up for – through increased income – the possible difficulties in exports. A warning, this, which is all the more crucial for Italy, whose production structure is driven by exports.

But Draghi's analysis goes even further in "turning the economic policy followed up to now inside out" - the former president of the ECB underlined - specifying that even the meaning of “structural reform” has changed. “Ten years ago, the term referred mainly to increasing labor market flexibility and compressing wages. Today it means increasing productivity growth without displacing jobs, but rather by retraining people.” The royal road is growth through a increased productivity as a central issue of competitiveness. If Europe continues with its average productivity growth rate since 2015, in 25 years – according to Draghi – the continental economy will have the same size as today, while spending on pensions, energy, defense and digitalization increases. With all due respect and esteem to Draghi, his considerations are reminiscent of those of the owl to the centipede; and more generally, the chorus loudly calling for higher wages resembles a tribal dance whose rituals are supposed to make rain fall.

The crisis of industrial relations and the problem of contracts

In Italy we have reached the point (see the General strike demands of November 29) that the issue of increasing wages is raised by the government and not only for the sectors in which it is an employer. It cannot be said that the current government - following the path traced by the executive chaired by Mario Draghi - has not made use of the available tax space to counteract weak domestic demand. The reduction in contributions has become structural and, for the first time in years, in the 2024 budget the cuts in pension revaluation have served to finance – through the reduction in contributions – the increase in wages. Mario Draghi in the Preface to the PNRR had pointed out the historic productivity gap: “Behind the difficulty of the Italian economy to keep pace with other advanced European countries and to correct its social and environmental imbalances, there is the'productivity trend, much slower in Italy than in the rest of Europe. From 1999 to 2019, GDP per hour worked in Italy grew by 4,2 percent, while in France and Germany it increased by 21,2 and 21,3 percent, respectively. Total factor productivity, an indicator that measures the overall efficiency of an economy – the then Prime Minister noted – decreased by 6,2 percent between 2001 and 2019, compared to a general increase at European level”.

When he was still prime minister, Draghi, speaking at the Confindustria Assembly, had hit the nail on the head. Recalling the golden years of the miraculo economico “We must ask ourselves,” the president said, “why those growth rates were interrupted starting in the 70s.” This was the starting point for the description of the changes in the international framework that had “broken the toy”: the abandonment of the Bretton Woods system, the price of oil, the end of the Vietnam War, major inflation. However, Draghi added, in this very difficult international framework, some countries have successfully faced such a complex situation. Our country has not succeeded in an operation of similar dimensions. “And one characteristic that separates these countries from Italy,” the prime minister emphasized, “is precisely the industrial relations system. In these countries, industrial relations, although stimulated, although stressed by what was happening around them, were good industrial relations. In our country, at the end of the 60s, on the other hand, witnesses the total destruction of industrial relations".

These considerations gave rise to a hornet's nest of controversy by the unions. Perhaps the Prime Minister had gone too far back, but it is useless to deny that today one of the main reasons for low wages lies precisely in the crisis of industrial relations and the inadequacy of the bargaining structure. When the linchpin of the collective bargaining model is the national category contract, the result can only be that of “to miss a beat” especially in a historical phase in which changes have become much faster and more sudden. Obviously the reality is complex: in a country where the presence of SMEs is completely prevalent it is difficult to identify coverage better guaranteed by national bargaining. But the problem remains. When the validity of a national contract is 3-4 years and for its renewal – if things go well – at least another year is needed (but sometimes much longer times are required) it is clear that in such a long time frame events can occur that destabilize the macroeconomic framework that served as a reference for the renewal. Consider, for example, inflation. After a period in which it had been lost track of, in recent years unexpected events have occurred that have determined a peak, especially since the revaluation system, the IPCA, was designed specifically to exclude the imported inflation cd (i.e. the cost of raw materials).

Collective bargaining: evolution and limits

The 1993 Protocol provided for a moment of verification of the inflationary trend halfway through the validity of the national contract which had the task of defending purchasing power after the abolition of the escalator cd. Furthermore, it is natural that the national contract is conditioned by its sustainability also by marginal companies. Decentralized bargaining has acquired an increasing role. tax policies, in favor of proximity bargaining and forms of corporate welfare, have made a decisive contribution to the innovation of the structures and contents of collective bargaining. But in more recent decades, we have thus moved from a historical phase in which it was the State that delegated to the social parties the definition of crucial issues of the employment relationship, to another in which the opposite occurs; in which large mass organizations prefer to orient politics and legislative power towards decisions that everyone cultivates in their own home without being in a position to share it.

The “nationalization” of wages

Think of the the story of the four referendums promoted by the Cgil to which are entrusted regulatory frameworks that in other historical moments would have been dealt with through negotiations. In recent years, we have gone even further, starting a phase of real “nationalization of wages”, in the sense that the law has become the last refuge of trade union organizations that are incapable as a whole of addressing and resolving the serious problems of the current phase. The State now: it provides incentives for companies to hire; it taxes an increasing share of social security contributions to reduce the "wedge" in favor of workers' wages; it provides the inclusion allowance. Not to mention the subsidies, aid and compensation. If we also added the legal minimum wage, public policies would take over the bargaining and would influence its direction, its burdens. It would not be a question, as also proposed by the CNEL and as was foreseen by law 92/2012 and by the Jobs Act to protect sectors not covered by collective bargaining, but in practice - this aspect has been overlooked in the debate - to introduce a spurious sliding scale but with equally critical effects, in times when inflation has returned to be alive and threatening. In essence, even the contractual renewals would become matter of an external operation conditioned by a fact: with 9 euros per hour, 3/5 of the salary would be defined by procedures and criteria external to the logic and mediation of negotiations, which is normally the point of equilibrium between all the variables relating to the contractual autonomy of the collective representative subjects.

Il circle of "nationalization of remuneration" could not help but lock himself in a court of law. The Supreme Court has begun to issue sentences according to which the judge in question is the only one to definitively ascertain what the "proportionate" and "sufficient" remuneration is to Article 36 of the Constitution. According to a decades-long consolidated jurisprudence, the judge recognized these requirements to the tariffs foreseen by the contracts stipulated by the most representative organizations. According to the new orientation of the Supreme Court (after the “historic” sentence n.27711, one pops up every week) not only the contract but not even the law can inhibit the judge from ruling on the constitutional adequacy of the amount of remuneration pursuant to the cited article. A bit like the story of the "safe countries" in terms of repatriation. The writer finds this jurisprudential orientation "subversive", in terms of work. Precisely because it leads the judge to evaluate in the abstract, on the basis of his conviction, a tariff that is not an independent variable of the production process, calling into question the result of that conflict of interest that is the basis of representation and negotiating activity.

If we have reached such a point of invasiveness and questioning of a society that assumes economic freedoms as an integrated component of political freedoms, before it is too late it would be good to realize the effects produced by a law on the representation that would allow a judiciary that tends to be "totalitarian" to enter into the associative life of trade unions in defiance of the principles of a pluralist society and in violation of paragraph 1 of article 39 of the Constitution ("trade union organization is free") which - please note - is the only current rule on which the trade union system is based.

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