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Institutions and Wage Formation in the New Europe

Edited by Gabriel Fagan, Francesco Paolo Mongelli and Julian Morgan

Institutions and Wage Formation in the New Europe addresses the role played by institutions in European wage formation with a focus on EMU and institutional change in labour markets.
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Chapter 6: Wage formation in the Italian private sector after the 1992„93 Income Policy Agreements

Piero Casadio


6. Wage formation in the Italian private sector after the 1992–93 Income Policy Agreements Piero Casadio* INTRODUCTION AND MAIN CONCLUSIONS This chapter analyses the effects of a decade of incomes policy on wage formation in Italy. The wage bargaining structure (henceforth BS) stemming from the 1992–93 Income Policy Agreements is widely seen as having been crucial in bringing about wage moderation by linking wages to the government’s target inflation. This has also been viewed as instrumental for the major fiscal adjustment in the 1990s and thereby supportive of Italian participation in the European single currency. This cooperative bargaining structure, that has been called the Concertazione between social partners has, inter alia, supported the adoption of performance-related wage premia at the firm level, temporary contracts and flexible working time arrangements. Nevertheless, the compressed wage differentials between skills and regions have remained unchanged. Since 1992–93 the main sectoral national contracts (SNCs) have precluded any price–wage spiral by aiming at increasingly lower inflation targets and eschewing the previous policy of automatic indexation for price increases. The coverage of firm-level contracts (FLCs) has increased only slightly. In the year 2000 more than half of the workers in firms with above ten employees were still excluded from such contracts. Inside the covered segment there has been a widespread adoption of performance-related wage premia, which are generally used more regularly than other forms of premia, but nevertheless remain relatively small in relation to the productivity trend. Only some elements of wage flexibility...

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