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Interview with Italian Labor Minister Fornero

Fornero responds to the companies that criticize her reform, calls young Italian people "choosy" and announces a new indemnity for the unemployed

Interview with Italian Labor Minister Fornero

This is Italy Team

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by Giovanni Fasanella

Minister Elsa Fornero, did you see your final score on the survey Panorama launched last week? They flunked it: would you care to comment?

«That is Panorama's conclusion» she answers calmly. «Your sample was not representative because it was based on companies mainly based in the northern regions and you only considered one aspect of the labor market reform. But the reform is built on a number of elements».

There is skepticism about the potential results of the reform in other parts of Italy, as we have seen elsewhere in the press.

It is not a reform in separate pieces, but considers the entire work life of a person. Moreover, it is necessary to consider that this is not a reform to combat the recession - other policies are needed for that - but to gain a firm grip on the recovery as soon as it starts. So to judge it, you should consider it as a whole, placing it in the proper perspective, because it cannot give immediate results. But I also have to stress a second point. Your survey only takes into consideration incoming flexibility and not outgoing flexibility as well. We intended, however, to enact a double corrective action, on both aspects of the labor market.

As regards entry on the labor market?

We have not reduced flexibility, but we have made it more difficult to use it improperly. Take the case of a salesperson hired as an independent worker with V.A.T., but who is made to work the hours of a dependent employee with mechanisms that limit any freedom. This is not right. Also because the salesperson, who is effectively subordinate and not an independent worker, will end up accepting anything just to keep the job. What we are saying is: if you want an independent collaboration, it must be just that, and must not hide a subordinate relationship; in the same way, if you hire a collaborator for a project, there must really be a project.

Perhaps the principle is too strict, from the companies' viewpoint.

Companies have a thousand good reasons for wanting flexibility: from freelancing with V.A.T. to project contractors, from temporary work to part time. The law does not eliminate these contracts, if anything it valorizes them. But the government cannot accept the viewpoint of the companies alone, it has to take account of that of the workers as well, and that, more in general, of the entire country, and not only in the short term. So not only did we not abolish temporary contracts, but we abolished the «reason» for the first temporary contract. That is, we say to the companies: do you need to hire for up to one year? Fine, you can do that without any bureaucratic obligation.

And from the workers' viewpoint?

Let's take young people, who are the first victims of precariety. A young person is hired once with a temporary contract, then again, then a third time. After that, what does this person find on the job market? There is a much greater risk of unemployment than for people hired on a permanent basis. This is a risk that society has to recognize. That is why we say: companies that make extensive use of these contracts actually create a cost to society in the form of funds used for social safety nets and the active policies that necessarily have to accompany the unemployed (and that the reform has greatly altered). Here is our reasoning: we facilitate flexibility, but at the same time we ensure that the companies participate in the higher social costs that must be borne with the spread of these more flexible types of contracts. A sequence of «here today and gone tomorrow» contracts, in addition to damaging the worker, is not even good for the company. The workers are unable to improve their human capital and the companies do not find it worthwhile to invest in the workers and lay the groundwork for a better work relationship that would result in more productive employees (because they would have a little more stability). The message of this reform, in other words - and this is not disproved by your survey, quite the contrary - is that it doesn't reduce flexibility but it prevents precariety.

There are those who say precariety doesn't exist.

Yes, so I've heard. But it does. And it damages our young people, as well as the companies. Our aim is to make the incoming relationship a bit more stable, to guarantee the worker, but also to increase productivity, for the benefit of the company.

The law brings a return of apprenticeship, but the companies say it is too costly.

It isn't true that it costs more, actually it costs less. We chose apprenticeship as the typical form of entry on the job market, and this is acknowledged and valorized in the responses to your survey. But for it to work we have to reduce the gap between the school and the world of work, which is very large, too large. This means we have to reduce the gap between scholastic training and companies, between companies and professional training. Our educational system emphasizes general culture. We have to go back to investing more in technical and professional culture too, as they have been devitalized for all these years. The schools have to help young people find a job, also by teaching them a trade. Businesses, on the other hand, also in their own interest, should understand that periodical study is also good for training workers, even after they have finished school.

However, as we saw in the poll, another worry of the enterprises is that apprenticeship, by placing them under obligations, will reduce flexibility in the long run.

Well, I would just like to meet all these human resource managers you interviewed. I really don't think it's presumptuous of me to say that I'm sure I'd be able to change quite a few of their minds. The Germans have taught us that a type of apprenticeship that combines work and school is a powerful means of reducing youth unemployment, increasing productivity, and motivating workers. This is really a central point I'd be happy to discuss with anyone. Indeed, I'd like to make an official request right now to Panorama: let me meet these managers so that I can hear their reasons and specific viewpoints, and in turn try to convince a good number of them.

Up to now you have explained how you would change the incoming labor market. What about the outgoing workers?

There will be less protection. We want a labor market that is more inclusive, that brings in more precarious young people. But we also want a more dynamic market. That means that once you have a job you can't consider it yours forever. A job has to be economically valid, that is, it has to support the creation of added value. For this reason we have reformed article 18 of the Workers' Statute, certainly not to penalize the workers or give the companies an advantage, but to have more employment on a dynamic market, where the greater probability of leaving is accompanied by a greater probability of entering. With our amendment we reduce the area of reinstatement in case of dismissal. We know there can be serious economic and disciplinary reasons for dismissing a worker. A court can declare the company's decision illegitimate, but it cannot order automatic reinstatement in the job, while it can award an indemnity up to a certain amount. This meets the needs of the enterprises with regard to the uncertainty of lengthy trials with reinstatement and companies condemned to disburse all the back pay. In short, we have reduced the risk for the company and the incentive of the worker to resort to the courts. If the company does not cheat (and in this case the court can intervene) and the worker understands the objective reasons for dismissal, the two parties can reach an agreement using another instrument of the reform, advance arbitration, that may also bring help in finding a new position (outplacement). This way, we help the worker find another job without the state having to keep unproductive employment alive.

The worker has to accept part of the risk, certainly, but what guarantees do we have that no one will cheat?

Look, frankly, if people are largely dishonest, there's no reform that's going to work. We haven't reformed article 18 starting from the belief that the courts are prejudicially favorable to the workers, as some employers complain. Their fears are unjustified: inItalywe have excellent judges who do not rule from ideological conviction, but decide on the merits. They can tell whether or not there is a clear inconsistency of the economic reason for dismissal. And in case of discrimination for political, ethnic, religious or sexual reasons, our reform clearly states that the dismissal is invalid: it is as if it had never happened.

You were speaking before about the need to make the labor market more dynamic.

Yes, I was saying that there is no place for a proprietary concept of the job. But, at the same time, we have to ensure that the transition from school to job, from unemployment to employment, requires less time. This is a dynamic market. This is where a change of rules and mentality are needed. We have provided an adequate redundancy system, It will not be able to happen that workers who lose their job can collect unemployment for years, without requiring anything of them and possibly even encouraging them to work in the black. So we thought: instead of unemployment benefits paid for by the community, wouldn't it be better to give some money for another job in a more productive position? Starting January 1, this will change with the introduction of social insurance for employment.

What does that mean?

It is an unemployment subsidy for one year if you are under50, ayear and a half if you are older. But there is a condition. You can't just stay at home. If someone offers you a job and you refuse, you lose the subsidy.

Minister, will all this be sufficient to make the market more dynamic?

No, of course not. We will have to equip ourselves in ways that have never been done before: active policies and services for work. Because jobs don't grow on trees. Is that impossible? I don't know, but we're betting it isn't. An activity of monitoring is necessary too, because reforms aren't born perfect. For the past month we have been working to launch a method of making data accessible to everyone. It will have to be a scientific method to change the things that don't work as they should. Because I hear extemporary criticisms by political personalities that leave me openmouthed, at times. I would like to ask politicians to have more sense of responsibility when it comes to topics like employment and pensions.

How are your relations with labor unions like Cgil and Fiom? You seem to be their bête noir!

On my part they are correct. On the part of the Cgil I see a great deal of bias. As regards the Fiom, I have met the secretary general, Maurizio Landini. He has a good background. Our positions differ but I respect him. I know very well that behind the Fiom there are difficult and often dramatic episodes. But we can't make the reforms if we think only of those stories: we have to think of the country.

What about the PD? Could your relations improve or are you still miffed at not being invited to the national festival of the party?

Do you want to know if it hurt my feelings...? Yes, it certainly did, I was hurt by that exclusion which I never understood the reason for. I have never tried to avoid discussion and explanations.

In Parliament attempts are being made to exclude certain categories from the new legislation of the pension reform. Minister, how do you intend to react?

I consider the pension reform the vastest operation of equilibration between generations achieved inItalyin the last 20 years. For it to have this value it is essential that it concern everyone. I have already had occasion to say, and can only repeat that any attempt to distinguish, to identify more important and less important "children" will encounter, as it did recently, the opposition of the government and my own personal opposition.

One last question: it must not be easy to be the Minister of Labor. With hindsight, is there anything you wish you had not done?

With hindsight, yes. I should never have trusted the first numbers I had on the «early retirees». I don't even think we should call them that, implying that it was their idea when actually it was forced on them by others, then left to us to safeguard them. I should have thought a lot more about the numbers I was given at the outset. But I think you have to recognize the attenuating circumstance: there really was not a minute to lose and we had to take urgent measures.

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