The Politics of Structural Reforms

The Politics of Structural Reforms

Social and Industrial Policy Change in Italy and Japan

Edited by Hideko Magara and Stefano Sacchi

For countries undertaking economic or political reform the case of Italy and Japan is both highly instructive and sobering. The Politics of Structural Reforms reveals what Italy and Japan gained and lost through a series of social and industrial reforms in the 1990s and 2000s, and why the changes they made in their policies have had little impact in softening the recent economic crisis.

Chapter 9: Italy’s labour policy and policy making in the crisis: from distributive coalitions to the shadow of hierarchy

Stefano Sacchi

Subjects: economics and finance, political economy, politics and public policy, political economy, social policy and sociology, comparative social policy, labour policy


The financial and ensuing employment crisis has further added to the already well-documented social protection gaps for large segments of the workforce in Italy, giving rise to an increased socioeconomic problem load. In a first phase, the main policy response was the exploitation of existing policies, mainly by adapting short-time work schemes to the crisis rather than creating a system of comprehensive unemployment compensation. This outcome, although detrimental for labour market outsiders and dysfunctional for Italy’s productivity and innovation rates, can be explained in terms of the material interests of all the corporate collective actors involved. Since the financial crisis escalated to a sovereign debt crisis, however, a good deal has changed. Incapacity to make economic policy decisions in the face of a rapidly deteriorating economic situation ultimately led to the resignation of the Berlusconi government in November 2011. Before resigning, however, the Berlusconi government passed a provision meant to allow firm-level collective bargaining to deregulate statutory employment protection for all types of workers. Even more importantly, it agreed with European Union (EU) partners and institutions that Italy would introduce a labour market reform to make dismissals easier. The installation of a non-partisan government led by Mario Monti, grudgingly supported by both the centre-left and centre-right, paved the way to a harsh pension reform that was introduced in a very top-down fashion by the government, with few concessions to the unions.

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