Nadia Garbellini and Matteo Gaddi – Italy: An unholy alliance

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Nadia Garbellini is an economist at the Università di Bergamo

Matteo Gaddi writes fot the Associazione Culturale Punto Rosso

This article is part of a piece that will be published in Italian in inchiesta Number 199



Preliminary notes for non-Italian readers

Marco Bentivogli is the National Secretary of FIM-CISL, the metalworkers Union of CISL.

CISL is one of the three Italian Trade Union confederations, of catholic origin and linked tothe  former Democrazia Cristiana (Christian Democrats); it was created in 1948 from a division within the unitary CGIL for political reasons.

Currently, CISL is characterised by being a very moderate trade union, which supported the choices of the past governments to cut workers’ rights (such as the Renzi Government’s Jobs Act, which repealed important parts of the Workers’ Statute, including the right to be reintegrated into employment in case of illegal dismissal).

CISL is the only Union in Italy which never went on strike against the social and economic policies of the last governments.

From the point of view of collective bargaining, CISL has come out in favour of a weakening of the National Labour Contract, in favour of decentralised bargaining in individual companies: on this, its position is almost identical to that of Confindustria, the Italian employers federation.

In the metalworkers’ sector in particular, FIM CISL has signed – with two other trade unions: Uilm and Fismic – a separate agreement – without Fiom CGIL – with FCA Group (CEO: Sergio Marchionne) which introduced a Special Contract for FCA workers that lowered wages, worsened the system for classifying personnel, and reduced working hours, shifts, and work breaks. In addition to the contents of the FCA Special Contract, this separate agreement inflicted  serious damage to the Trade Union democracy, because it excluded Fiom CGIL from the exercise of its basic trade union rights. A ruling by the Constitutional Court was necessary to enable Fiom to return to the FCA Group’s factories.


Carlo Calenda is currently Minister for Economic Development. He was Director of Confindustria and manager of several companies (including Ferrari and Sky).

In 2013 he stood as a candidate in general elections serving Scelta Civica, the party founded by Mario Monti. The programme included the implementation of the Fiscal Compact, a balanced budget, privatisation, and liberalisation.


A necessary introduction

Before making any critical remarks on its content, the article published by Sole 24 Ore on January 12, signed by Carlo Calenda and Marco Bentivogli (An Industrial Plan for an Italy of Competences), it is important to point out an outstanding matter of principle.

Never, in the history of the Italian Republic, have a Minister and Trade Union Secretary co-authored what appears to be not only a newspaper article, but a real political programme. If a trade union is truly a true trade union, it should ferociously defend its autonomy and independence against companies, political parties, and governments. Only in this manner can it become the promoter of a general model of society, built on the basis of the autonomous point of view of labour: an essential element in order to avoid slipping into forms of corporate union (only interested in defending the prerogatives of certain specific sectors, without developing a postion concerning a general organisation of society) or, even worse, into a subordinate union.

Marco Bentivogli, national secretary of FIM-CISL, knows only too well that a minister – and in particular the Minister for Economic Development – represents an interlocutor and, in some cases, a counterpart of the Trade Unions: think about the case of Ilva, about the many industrial crisis roundtables set up at the ministry directed by Calenda (Italtel, Jabil, Bombardier, Franco Tosi etc.), or about the recent meeting (February 16) aiming at defining an industrial plan for the automotive sector. All of these are very delicate negotiations, in which the rigid and clear distinction of roles between the subjects involved should be the prerequisite for any correct and transparent confrontation, and in which every actor should play freely, without constraints of any kind.

In the same way, we believe that Marco Bentivogli knows only too well that Calenda’s career has also gone through managerial roles both in Confindustria (during the presidency of Luca Cordero di Montezemolo) and in large private companies. Hence, he is a Minister with strong ties to the business community.

Of course, this is all entirely legitimate, but in our opinion quite inappropriate.

The philosophy of the Calenda-Bentivogli Plan

The article by Calenda and Bentivogli presents, according to the two authors, a programme for growth. It touches upon several topics: industrial policies, taxation, bargaining, strategic sectors (energy, ICT, local public transport), training; in short, it is a comprehensive political programme, presented less than two months before a general election.

Before reviewing each individual point, it is worth highlighting three aspects that characterise the entire text, and which appear as the fundamental inspiration behind it: 1) the rights of workers, both at a legislative and contractual level, represent an element of rigidity to be overcome so that the competitiveness of Italian companies can develope; 2) the role of the state in economics must be limited to (fiscal and financial) support of private enterprises engaged in international competition made even more difficult through globalisatio. that entails that government economic planning planning and direct dconomic intervention must cease; 3) enterprises are the centre of all considerations, as their interests coinciding with that of society. There is nor room for other actors, except in a subordinate role.

The topics in detail

 General taxation. Calenda and Bentivogli complain about the fact that, in the current election campaign, “the catchword seems to be ‘abolishment’, passing costs on to ‘general taxation’ and fuelling the misunderstanding according to which the latter is different from taxpayers’ money”. It is obvious that general taxation, as well as selective forms of tax levy, are “taxpayers’ money” but: (a) the use of general taxation is an element of civilisation, at least within European social model, based on the principle of progressive taxation; (b) it would be appropriate for the two authors to recall this principle also when the much-vaunted general taxation finances tax relief for companies (including those implied by the Jobs Act), or the generous incentives such as those for the purchase of machinery (Sabatini Law) and/or for Industry 4.0 investments (super- and hyper-amortisation).

Public debt. Faced with the above mentioned catchword, “abolishment”, presumably referring to the Jobs Act and Fornero Reform, which Bentivogli, therefore, seems to be  willing to maintain. Instead the two authors confront the public with the usual bogeyman: the “decades of financial irresponsibility that brought Italy close to default in 2011”. Firstly, it is specious to say that Italy was close to default, and hence that the blood, sweat and tears austerity policy adopted the by the Monti government was  inevitable. It should also be remembered that for several years Italy has been characterised by a significant primary surplus; interests on debt turned that into a deficit. This is a result not of the soundness of public finances, but instead due to financial speculation and the absence of institutional instruments capable of curbing it. But using this spectre helps the authors wipe out any ambition of even considering economic policies other than those they propose. Public money is well spent only when it flows into the pockets of investors, oiling the gears of capital.

International production chains and innovation. After correctly recognizing that “the digital revolution creates and destroys jobs, and it is not possible to predict with certainty what the net balance will be”, the authors show off divinatory abilities: “employment will grow in the countries that have invested in digital skills and will decrease in those that have not acquired them adequately.”

Things are a bit more complicated than that. Firstly, if the authors are right and the digital revolution will lead to strong productivity increases, it is more likely that employment will not increase at all in countries that have invested in certain skills. Employment is likely to grow in the countries that produce technologies and commodities incorporating them, not just use them. It is also very likely that, at least in the initial stage, precisely the countries that are considered as lagging behind will benefit from increases in employment, thanks to international division of labour. New technologies will presumably be used when they result in lower production costs. In the presence of relocation possibilities to low-cost countries, this will be the chosen option if it proves to be the cheapest.

Countries such as Poland, the Czech Republic and Slovakia are seeing their employment levels rise, especially those linked to manufacturing, precisely because of relocation from Western Europe. International division of labour does not depend on the presence of skills and competences, but on specific political and economic choices.

The question that Calenda and especially Bentivogli should ask themselves is rather what kind of employment they want to create, and the kind of productive structure they aim to achieve. A country like Italy should consider how it fits into international production chains: simply as a sub-contractor of low-cost components for German industry, or with its own industrial policy?

Fragility of Italian industry and strategic sectors. Among the elements of fragility in the Italian industrial system, Calenda and Bentivogli point out the cost of energy and poor connectivity, described as “less favourable than for international competitors.”

This statement, true in itself, gives rise to some astonishment: the conditions for the provision of basic services to business, such as energy and communications, depend on the state of strategic sectors which, not by coincidence, were characterised by a strong state presence – before the dogma of privatisation and liberalisation prevailed. In Italy these sectors, along with many others, have been subjected to major liberalisation and privatisation measures, depriving the state of fundamental levers to support economic development.

The case of energy is paradigmatic: liberalisation and privatisation should have improved the quality of services and reduced tariffs according to the thaumaturgical (the working of wonders or miracles) virtues of free market and competition. The results of these processes are there for all to see, starting with the inexorable increase in tariffs. But while in Italy all forms of public intervention were sacrificed in the name of a free market and competition, many countries were not fooled. France has maintained the public control of its national champions (Electricité de France, etc.), while Germany, as noted in a recent publication of the European Commission (DG Competition) has made extensive use of state aid to support its energy-intensive enterprises, including steel companies, not to mention its programme to encourage the investment in renewables.

A similar argument concerns the issue of connectivity: the Government’s Ultra Wide Band National Plan. Rather than focusing on the direct implementation of the strategic infrastructure,  the government gave private operators a free hand in ‘market areas’, nonetheless financed with public resources through the tendering mechanism for the construction of this infrastructure in ‘market failure’ areas. In other words, where opportunities for profits do exist, let private operators take advantage of them. When they do not, let the public sector pay. Is this not “general taxation”? Or is it the case that general taxation is okay when pleasing private companies?

Obviously, for the two authors, the principle of competition does not tolerate a rich local public services sector (transports, water, waste disposal, etc.). This sector has to be transformed from a service for the benefit of local communities to a benefit for companies.

Public presence in strategic sectors is not only an element of support for a country’s productive system, but it is also an instrument for making job-creating investments; but the idea that the public sector with its own investments can create jobs is diametrically opposed to the authors’ approach.

Labour and bargaining. One suffices to understand what the Minister and the Secretary of FIM CISL think about labour: among the elements of fragility in our productive system, they explicitly mention “a labour market that is still too centralised, with methods of bargaining for wage conditions far away from the competitive framework of individual companies.” This means three very clear things: 1) the end of the national collective labour contract; 2) wage increases are seen as an obstacle to the competitiveness of companies; and c) wages must be functional to competitiveness – but it would be better to explicitly say profitability. Here the reasoning returns to the idea, repeatedly expressed by Confindustria, that wages, and therefore labour conditions, must “absorb” business risk: in this sense, wages cease to be an element of union bargaining (linked to the conditions under which workers sell their labour) to become a subordinate element to economic performance of individual enterprises. Or, even more: functional to it.

Decentralised negotiations and the “Covenant for the Factory”. The logical consequence stated above is that Calenda-Bentivogli attack the national collective labour contract , in order to promote individual company-level bargaining, obviously linked to companies’ profitability indicators. “The national contract makes sense if (…) its role is that of a ‘guarantee framework’, aimed at ensuring as close a dimension as possible to company’s proximity.” This meanstearing up the National Contract, which has always been an irreplaceable tool for: a) ensuring equal pay for equal work within the same category; b) avoiding (downwards) competition between workers; c) allowing workers without union representation to enjoy the same rights as all the others. These three elements of the CCNL are so important that the very existence of a national union of all workers crucially depends on the existence of national bargaining. If the union lacks this dimension of solidarity and class, its destiny can only be to fall back into a purely business-level sphere, that is corporative and, above all, subordinate to the needs of capital.

This concept of trade unions makes reduces the title “Covenant for the Factory” to a farce, an expression coined, incidentally, by the President of Confindustria, Boccia. The catchword in the matter of bargaining thus becomes that of productivity which is nothing but companies’ profitability.

Industry 4.0. According to Calenda-Bentivogli, their plan has the merit of having “put industrial policy back at the centre of the country’s agenda”. Obviously, the authors have a peculiar idea of the concept of industrial policy. In our opinion, industrial policy should a) create good and stable jobs b) aim at creating an industrial structure that produces goods and services that meet the needs of the people of a country c) encourage the development of skills d) promote ecological and a transition to renewable energy.

The Italian Government’s Industry Plan 4.0

This plan was presented in September 2016.

First of all, all of the Plan’s objectives only benefit companies: greater flexibility, which would allow them to take advantage of economies of scale even when producing small batches; shortening the time necessary for prototypes to be switched-over to serial production; decreasing set-up time, mistakes and machine stops, which would enhance productivity; the introduction of sensors monitoring production in real time, which would increase quality. Everything, of course, in conformity with the imperative of competitiveness, to be achieved thanks to the advantages offered by the internet.

The specific measures included in the plan entail a substantial commitment of public resources to private enterprises in relation to investments in innovation. From 2017 to 2020 the government aims to leverage 24 billion euros of private investment by making public funding of13 billion euros  available. This would pay for amortisation, super-amortisation, and hyper-amortisation on investments in technology and capital goods; to finance the “Fondo Rotativo Imprese”, which provides firms with credit at lower rates to firms making investments in innovation; to finance tax credit for private research; to strengthen the financial system supporting Industry 4.0.

To make a single example, thanks to hyper-amortisation, a firm making investing 1 million euros in capital goods imputable to Industry 4.0 would get an enormous tax break: 360,000 Euros – instead of 96,000 – tax benefit over five years, thus increasing the tax benefit by 275%.

In the field of skills development, the public commitment amounts to 700 million euro, as against 200 millions from the private sector.

Finally, the public sector commitment to the main support measures amounts to 10 billion euros in 4 years, as against 32 billion euros of private money. It is worth looking more closely at this sum:

A significant part is devoted to the installation of ultra-broadband, of which more than half of the investment (6.7 billion euro) would be financed by the taxpayer.

There is of course a chapter devoted to “salary-productivity exchange”, with the state funding firm-level bargaining aimed at linking wage increases to productivity changes with the state providing 1.3 billion euro.

To conclude, the class aspect of these measures is apparent: billions of euros provided to firms, and absolutely no occupational, social, or industrial targets.

 The weaknesses of Plan 4.0. First, the infrastructure provision plan is already suffering its first setback: the installation of ultra-broadband is completely behind schedule.

Secondly, public commitment should stimulate private investment in goods and technologies connected to Industry 4.0. However it is not clear whether such investments will generate production and employment in Italy or abroad. In other words, are sensors, devices, robots, hardware, software and so on going to be produced in Italy or imported? If the latter is the case, besides a increase in the Italian trade deficit, the government’s plan is going to generate employment abroad rather than in Italy.

Morevoer, the Plan hardly mentions a chronic weakness of the Italian industrial system, i.e. the absolute predominance of small enterprises, usually part of more complex production chains whose head is located abroad, often in Germany. The risk is therefore that of digitalising a set of production chains led by German companies, whose predominance the whole of supply-chain would even further re-enforced.

Finally the plan, by its own admission, adopts a horizontal approach to industrial policies, with the explicitly stated aim of avoiding the vertical approach.

 The great absentee: Labour. The Plan lacks any reference to labour, except in terms of training and skills development.

One example will suffice: Industry 4.0 will generate new jobs (new sectors, products, services) and, at the same time, will destroy jobs (due to automation, robots, etc.). Estimating job balance at the single firm or sector level appears to be feasible. Moreover, it would be worth trying to understand the way in which Industry 4.0 will change workers’ status (new and more flexible forms of employment; dichotomy between employment and self-employment, etc) and working conditions (working time, safety at work, etc.).

How will companies and territories comply with the new paradigm? Which new skills will become necessary? How will working tasks and processes change? How will working performance take place, and be monitored by each firm? All these are questions which the Government’s Plan does not even mention. As usual, the only point of view adopted is the enterprises’ one.



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