The Italian Labour Market and the 2015 Jobs Act
What is it What will change
Pietro Garibaldi Collegio Carlo Alberto Universitagrave di Torino
Conseil drsquoorientation pour lrsquoemploi Paris May 12 2015
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 1
Outline
1 Labour in a depressed economy 2 Il Jobs act the economics of reducing
duality 3 Il Jobs Act The contents 4 Jobs Acts What shall we expect 5 Other structural issues and conclusions
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 2
1 A depressed economy and a depressed labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 3
-1
0
1
2
3
4
5
2001-2013 1981-2000
Gdp Growth Italy scores the Worst
medium run Oecd performance
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 4
GPD The Never ending great recession 13 quarters under
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 5
Low labour Productivity Growth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 6
From the Great recessions to Long swings in in Unemploymenthellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 7
bull Marginal reforms (temporary contracts and other flexible contracts) helped the fall in unemployment up to the 2008 ndash The Honeymoon Effect of Temporary Contract (Boeri
Garibaldi Economic Journal 2007) bull When the 2008 crisis hit the honeymoon effects
dramatically broke up bull After the crisis total and youth unemployed soared
both reaching historical high levels
Marginal Reforms and Honyemoon Effects
Rationalize Swings in unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 8
hellipwhat is happening to unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 9
But long term unemployment is huge across age
Age Italy Europe
lt 1 year 1 year and over
lt 1 year 1 year and over
15 to 19 614 386 806 194 15 to 24 522 478 727 273 20 to 24 495 505 692 308 25 to 54 471 529 573 427
55+ 446 554 445 555 Total 481 519 598 402
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Incidence of unemployment by duration () Source OECD database Dataset Incidence of unemployment by duration
10
Youth Unemployment as in the worst South Eureopan Countries
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 11
Share of Temporary Employment In Line with EU
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
But Huge Share of self employed Self employed in the statistics but employees de facto
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 13
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Outline
1 Labour in a depressed economy 2 Il Jobs act the economics of reducing
duality 3 Il Jobs Act The contents 4 Jobs Acts What shall we expect 5 Other structural issues and conclusions
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 2
1 A depressed economy and a depressed labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 3
-1
0
1
2
3
4
5
2001-2013 1981-2000
Gdp Growth Italy scores the Worst
medium run Oecd performance
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 4
GPD The Never ending great recession 13 quarters under
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 5
Low labour Productivity Growth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 6
From the Great recessions to Long swings in in Unemploymenthellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 7
bull Marginal reforms (temporary contracts and other flexible contracts) helped the fall in unemployment up to the 2008 ndash The Honeymoon Effect of Temporary Contract (Boeri
Garibaldi Economic Journal 2007) bull When the 2008 crisis hit the honeymoon effects
dramatically broke up bull After the crisis total and youth unemployed soared
both reaching historical high levels
Marginal Reforms and Honyemoon Effects
Rationalize Swings in unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 8
hellipwhat is happening to unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 9
But long term unemployment is huge across age
Age Italy Europe
lt 1 year 1 year and over
lt 1 year 1 year and over
15 to 19 614 386 806 194 15 to 24 522 478 727 273 20 to 24 495 505 692 308 25 to 54 471 529 573 427
55+ 446 554 445 555 Total 481 519 598 402
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Incidence of unemployment by duration () Source OECD database Dataset Incidence of unemployment by duration
10
Youth Unemployment as in the worst South Eureopan Countries
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 11
Share of Temporary Employment In Line with EU
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
But Huge Share of self employed Self employed in the statistics but employees de facto
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 13
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
1 A depressed economy and a depressed labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 3
-1
0
1
2
3
4
5
2001-2013 1981-2000
Gdp Growth Italy scores the Worst
medium run Oecd performance
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 4
GPD The Never ending great recession 13 quarters under
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 5
Low labour Productivity Growth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 6
From the Great recessions to Long swings in in Unemploymenthellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 7
bull Marginal reforms (temporary contracts and other flexible contracts) helped the fall in unemployment up to the 2008 ndash The Honeymoon Effect of Temporary Contract (Boeri
Garibaldi Economic Journal 2007) bull When the 2008 crisis hit the honeymoon effects
dramatically broke up bull After the crisis total and youth unemployed soared
both reaching historical high levels
Marginal Reforms and Honyemoon Effects
Rationalize Swings in unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 8
hellipwhat is happening to unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 9
But long term unemployment is huge across age
Age Italy Europe
lt 1 year 1 year and over
lt 1 year 1 year and over
15 to 19 614 386 806 194 15 to 24 522 478 727 273 20 to 24 495 505 692 308 25 to 54 471 529 573 427
55+ 446 554 445 555 Total 481 519 598 402
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Incidence of unemployment by duration () Source OECD database Dataset Incidence of unemployment by duration
10
Youth Unemployment as in the worst South Eureopan Countries
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 11
Share of Temporary Employment In Line with EU
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
But Huge Share of self employed Self employed in the statistics but employees de facto
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 13
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
-1
0
1
2
3
4
5
2001-2013 1981-2000
Gdp Growth Italy scores the Worst
medium run Oecd performance
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 4
GPD The Never ending great recession 13 quarters under
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 5
Low labour Productivity Growth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 6
From the Great recessions to Long swings in in Unemploymenthellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 7
bull Marginal reforms (temporary contracts and other flexible contracts) helped the fall in unemployment up to the 2008 ndash The Honeymoon Effect of Temporary Contract (Boeri
Garibaldi Economic Journal 2007) bull When the 2008 crisis hit the honeymoon effects
dramatically broke up bull After the crisis total and youth unemployed soared
both reaching historical high levels
Marginal Reforms and Honyemoon Effects
Rationalize Swings in unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 8
hellipwhat is happening to unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 9
But long term unemployment is huge across age
Age Italy Europe
lt 1 year 1 year and over
lt 1 year 1 year and over
15 to 19 614 386 806 194 15 to 24 522 478 727 273 20 to 24 495 505 692 308 25 to 54 471 529 573 427
55+ 446 554 445 555 Total 481 519 598 402
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Incidence of unemployment by duration () Source OECD database Dataset Incidence of unemployment by duration
10
Youth Unemployment as in the worst South Eureopan Countries
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 11
Share of Temporary Employment In Line with EU
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
But Huge Share of self employed Self employed in the statistics but employees de facto
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 13
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
GPD The Never ending great recession 13 quarters under
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 5
Low labour Productivity Growth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 6
From the Great recessions to Long swings in in Unemploymenthellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 7
bull Marginal reforms (temporary contracts and other flexible contracts) helped the fall in unemployment up to the 2008 ndash The Honeymoon Effect of Temporary Contract (Boeri
Garibaldi Economic Journal 2007) bull When the 2008 crisis hit the honeymoon effects
dramatically broke up bull After the crisis total and youth unemployed soared
both reaching historical high levels
Marginal Reforms and Honyemoon Effects
Rationalize Swings in unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 8
hellipwhat is happening to unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 9
But long term unemployment is huge across age
Age Italy Europe
lt 1 year 1 year and over
lt 1 year 1 year and over
15 to 19 614 386 806 194 15 to 24 522 478 727 273 20 to 24 495 505 692 308 25 to 54 471 529 573 427
55+ 446 554 445 555 Total 481 519 598 402
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Incidence of unemployment by duration () Source OECD database Dataset Incidence of unemployment by duration
10
Youth Unemployment as in the worst South Eureopan Countries
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 11
Share of Temporary Employment In Line with EU
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
But Huge Share of self employed Self employed in the statistics but employees de facto
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 13
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Low labour Productivity Growth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 6
From the Great recessions to Long swings in in Unemploymenthellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 7
bull Marginal reforms (temporary contracts and other flexible contracts) helped the fall in unemployment up to the 2008 ndash The Honeymoon Effect of Temporary Contract (Boeri
Garibaldi Economic Journal 2007) bull When the 2008 crisis hit the honeymoon effects
dramatically broke up bull After the crisis total and youth unemployed soared
both reaching historical high levels
Marginal Reforms and Honyemoon Effects
Rationalize Swings in unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 8
hellipwhat is happening to unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 9
But long term unemployment is huge across age
Age Italy Europe
lt 1 year 1 year and over
lt 1 year 1 year and over
15 to 19 614 386 806 194 15 to 24 522 478 727 273 20 to 24 495 505 692 308 25 to 54 471 529 573 427
55+ 446 554 445 555 Total 481 519 598 402
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Incidence of unemployment by duration () Source OECD database Dataset Incidence of unemployment by duration
10
Youth Unemployment as in the worst South Eureopan Countries
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 11
Share of Temporary Employment In Line with EU
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
But Huge Share of self employed Self employed in the statistics but employees de facto
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 13
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
From the Great recessions to Long swings in in Unemploymenthellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 7
bull Marginal reforms (temporary contracts and other flexible contracts) helped the fall in unemployment up to the 2008 ndash The Honeymoon Effect of Temporary Contract (Boeri
Garibaldi Economic Journal 2007) bull When the 2008 crisis hit the honeymoon effects
dramatically broke up bull After the crisis total and youth unemployed soared
both reaching historical high levels
Marginal Reforms and Honyemoon Effects
Rationalize Swings in unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 8
hellipwhat is happening to unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 9
But long term unemployment is huge across age
Age Italy Europe
lt 1 year 1 year and over
lt 1 year 1 year and over
15 to 19 614 386 806 194 15 to 24 522 478 727 273 20 to 24 495 505 692 308 25 to 54 471 529 573 427
55+ 446 554 445 555 Total 481 519 598 402
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Incidence of unemployment by duration () Source OECD database Dataset Incidence of unemployment by duration
10
Youth Unemployment as in the worst South Eureopan Countries
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 11
Share of Temporary Employment In Line with EU
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
But Huge Share of self employed Self employed in the statistics but employees de facto
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 13
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
bull Marginal reforms (temporary contracts and other flexible contracts) helped the fall in unemployment up to the 2008 ndash The Honeymoon Effect of Temporary Contract (Boeri
Garibaldi Economic Journal 2007) bull When the 2008 crisis hit the honeymoon effects
dramatically broke up bull After the crisis total and youth unemployed soared
both reaching historical high levels
Marginal Reforms and Honyemoon Effects
Rationalize Swings in unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 8
hellipwhat is happening to unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 9
But long term unemployment is huge across age
Age Italy Europe
lt 1 year 1 year and over
lt 1 year 1 year and over
15 to 19 614 386 806 194 15 to 24 522 478 727 273 20 to 24 495 505 692 308 25 to 54 471 529 573 427
55+ 446 554 445 555 Total 481 519 598 402
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Incidence of unemployment by duration () Source OECD database Dataset Incidence of unemployment by duration
10
Youth Unemployment as in the worst South Eureopan Countries
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 11
Share of Temporary Employment In Line with EU
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
But Huge Share of self employed Self employed in the statistics but employees de facto
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 13
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
hellipwhat is happening to unemployment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 9
But long term unemployment is huge across age
Age Italy Europe
lt 1 year 1 year and over
lt 1 year 1 year and over
15 to 19 614 386 806 194 15 to 24 522 478 727 273 20 to 24 495 505 692 308 25 to 54 471 529 573 427
55+ 446 554 445 555 Total 481 519 598 402
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Incidence of unemployment by duration () Source OECD database Dataset Incidence of unemployment by duration
10
Youth Unemployment as in the worst South Eureopan Countries
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 11
Share of Temporary Employment In Line with EU
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
But Huge Share of self employed Self employed in the statistics but employees de facto
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 13
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
But long term unemployment is huge across age
Age Italy Europe
lt 1 year 1 year and over
lt 1 year 1 year and over
15 to 19 614 386 806 194 15 to 24 522 478 727 273 20 to 24 495 505 692 308 25 to 54 471 529 573 427
55+ 446 554 445 555 Total 481 519 598 402
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Incidence of unemployment by duration () Source OECD database Dataset Incidence of unemployment by duration
10
Youth Unemployment as in the worst South Eureopan Countries
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 11
Share of Temporary Employment In Line with EU
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
But Huge Share of self employed Self employed in the statistics but employees de facto
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 13
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Youth Unemployment as in the worst South Eureopan Countries
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 11
Share of Temporary Employment In Line with EU
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
But Huge Share of self employed Self employed in the statistics but employees de facto
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 13
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Share of Temporary Employment In Line with EU
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
But Huge Share of self employed Self employed in the statistics but employees de facto
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 13
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
But Huge Share of self employed Self employed in the statistics but employees de facto
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 13
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
And high share of Youth Temporary
Age Employment Italy Europe OECD countrie
s 15 to 24 permanent 5014 6062 7535
temporary 4986 3938 2465 25 to 54 permanent 8824 8807 9011
temporary 1176 1193 989 55 to 64 permanent 9395 9259 9071
temporary 605 741 929 65+ permanent 8564 8211 8069
temporary 1436 1789 1931 Total permanent 8664 8558 8807
temporary 1336 1442 1193
Incidence of permanent employment in 2013 Source OECD database Dataset Incidence of permanent employment
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 14
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Very Low Transition Rate into Open ended contracts
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 15
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Low Training in Dual Countries Share of Youth Obtaining Training (20-24 years)
000
1000
2000
3000
4000
5000
6000
7000Ita
liaGr
ecia
Belg
ioPo
rtog
allo
Spag
naFr
anci
aSv
ezia
OCS
EIrl
anda
Finl
andi
aAu
stria
Regn
o U
nito
Nor
vegi
aN
uova
Zel
anda
Stat
i Uni
tiGe
rman
iaCa
nada
Dani
mar
caSv
izze
raAu
stra
liaPa
esi B
assi
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act
Fonte OCSE Education at a Glance 2012
16
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Consequence of Dualism
bull Low Training in temporary contracts bull Low future pensions of youth employed in
precarious jobs bull Long term consequence of youth
unemployment (scarring effects) bull Low lifetime wages bull Low future employment opportunities bull Poor health ()
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 17
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
2 The Jobs Acts and the Economics of Reducing Dualism
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
18
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
The Economics Intuition
bull Offering a long term (open ended) contract that ndash Preserves flexibility at entry at the firm level ndash Offers a long term entry for the youth
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 19
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
The Lobby of Labour Economists
bull Economists across Europe proposed long term contract with SP increasing with tenure to reduce duality ndash France Cahuc and Kramarz Blanchard and Tirole ndash Spain Bentolila Garicano and other 30
economists ndash Italy Boeri-Garibaldi Un Nuovo Contratto per
Tutti Chiarelettere 2008 And labour scholar (Pietro Ichino) drafted policy proposal
bull What is the economics of these proposals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 20
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
The Economics of Protection Increasing with Tenure
bull (Boeri Garibaldi Moen 2014 Inside Severance Payments)
bull Wages are deffered to provide incentives to invest in job specific training
bull Firms can commit on increasing wages but can not commit on employment
bull Firms Ex post have incentives to dismiss senior workers
bull If marginal cost of training increasing with tenure severance payments increasing with tenure are optimal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 21
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Optimal Severance Payments and tenure in Theory
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 22
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
3 The Jobs Act 31 The content 32 Open Ended contracts with protection increasing with tenure
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 23
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Overall Comments
bull The jobs act (and the new contract in particular) is very welcome
bull It is (arguably from 2016- see below) the most important labour reform of the last 20 years
bull It may potentialy change the italian labour markets in a decisive way
bull My comments are ndash The internal Coherence of the architecture ndash What shall we expect and monitor ndash Open issues
Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act 24
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
The Jobs Acts and Other Legislative Initiatives
bull Jobs Act Act 1 (L 10 dicembre 2014 n 183) laquoJobs Actraquo ndash Decrees enacted (24 dicembre 2014)
bull Open ended with increasing tenure for New Hires bull Changes in Unemployment Benefits
bull Jobs Act Act 2 (currently in Parliament) bull Non standard Labor contracts bull Active policies
bull Decreto Poletti (L conv 16 maggio 2014 n 78) ldquoflexiblerdquo fixed term contract
bull Budget Law (Stability Law) (L 23 dicembre 2014 n 190) tax subsidy for new hires on an open ended basis
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 25
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
bull Are policies fully consistent ndash A tale of 3 policies
bull 31 The Poletti Decree bull 32The Subsidy for New Hires bull 32 Open Ended contracts with protection increasing with tenure
3 Jobs Act and Internal Architecture
26 Pietro Garibaldi- Collegio Carlo Alberto-Jobs Act
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Tax Subsidy on New Hires
bull Starting January 1deg 2015 bull Any NEW hire on an open ended basis will receive a
tax cut for three years bull Tax cut up to 8000 euro per year bull Budget Financing available for 2015 with uncertainty
over the future bull Tax subsidy entered into law BEFORE the jobs act and
in January March 2015 is already operating bull This policy is very important and likely to be operating
independently of the JOBS ACT
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 27
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Protection Increasing with Tenure bull As of March 7 2015 a new open ended contract with
ldquoincreasing protectionrdquo is fully operating in Italy bull A new standard only for new hires bull Monetary compensation increasing with tenure bull Reinstatement (Article 18 Labour Code) does not apply
throughout employment relationship for economic dismissal bull Reinstatament operating only for discriminatory
dismissals and specific disciplinary dismissal ndash Boeri Garibaldi Un Nuovo Contratto per Tutti (and draft law)
proposed increasing protection and no reinstatement for both economic and disciplinary for three years
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 28
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Jobs Act and Increasing Protection
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 29
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Discriminatory Dismissals
bull The worker can appeal the dismissal into court by arguing that the dismissal was discriminatory
bull Sanctions reinstatement plus foregone wages from dismissal to court ruling
bull Worker- in case of reinstatement- can opt for monetary compensation of 15 months
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 30
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Economic Dismissal (I) bull Objective ensure the payment of a pre-set compensation
increasing with tenure bull Conciliazione laquorapidaraquo (rupture conventionelle) the
employer has 60 days from the dismissal to offer a pre-set compensation through a cheque drawn on a bank and ready for payment
ndash 1 month per year of service ( minimum of 2 and e max 18 months)
bull If worker accepts the offer or cash in the cheque heshe forgo the right to appeal (even if appeal was already started) and the dismissal is effective at the dismissal date
bull Foreign experience Germany (Section 1a TPA 2004) France (laquorupture conventionnelleraquo)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 31
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Economic Dismissal (II) bull If dismissal ends up in court
ndash Firm can still proof that dismissal was economically FAIR (zero compensation due to the worker who is entitle to unemployment benefit)
ndash The worker can prove that the the dismissal was economically UNFAIR obtaining a larger compensation (2 months per year of tenure minimum of 4 and max 24 months) o r discriminatory
bull The idea is that the scheme works as long as both parties have incentive of using the (speedy compensation) rupture conventionelleraquo ndash Speedy compensation is tax free
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 32
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Disciplinary Dismissals bull The jobs act specifies when reinstatement for
disciplinary dismissal is allowed (art3 comma 2) ndash laquoit must be proved in court that the disciplinary allegations
against the worker are falserdquo bull For all other disciplinary dismissals same sanctions as
the economic dismissals
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 33
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Jobs act Reduces Uncertainty
Country Tu Tef Tu-Tef stdev Australia 129 28 101 47
Austria 163 00 163 71 CzechRepublic 180 15 165 76
Denmark 140 30 110 58 Finland 140 00 140 61 France 257 54 203 107
Germany 366 100 266 128 Hungary 242 60 182 101
Ireland 389 40 349 156 Italy (post Jobs Act) 236 00 236 55 Italy (pre Jobs Act) 341 00 341 148
Japan 92 00 92 46 Korea 168 00 168 73
Luxembourg 122 60 62 36 NewZealand 120 00 120 52
Poland 88 30 58 29 Portugal 603 120 483 224
SlovakRepublic 248 40 208 104 Spain 360 120 240 120
Sweden 320 00 320 139 Switzerland 60 00 60 26 Notes data are expressed in monthly wages Source EPLex OECD (2013)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 34
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Open Issue and Risks (I) double moral hazard and disciplinary
dismissals bull Asymmetry between economics and
disciplinary compensation bull Employee will always claim that dismissal is
economic (no reinstatement) while worker will always claim dismissal is disciplinary
bull Fairly difficult to establish borders between dismissal for third parties Room for double moral hazard (Boeri Garibaldi Moen 2014)
bull Will litigation be reduced We also find odd giving zero compensation in case of fair dismissal
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 35
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Risk II What will happen to other
nonstandard labour contract bull Other form of non standard labour contract are
still there (self employed in the statistic but de facto employee)
bull Draft of further decrees exist but are not into law yet
bull Fixed term contracts were liberalized in May 2014 (up to 5 renewals in a three years lag)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 36
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Risk III Is the Cursus Honorum too long bull Fully flexible Fixed term contract can crowd out new
contract bull Cursus honorum can still be very long 3 years of
fixed terms contract plus new contract with low protection in the first two years
bull Will Dualism will go down
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 37
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Collective Dismsissal bull Same sanctions for individual dismissals apply to
collective dismissals No reinstatement for unfair collective dismissal Proved breach of procedure 1 month per year of tenure
from 2 to max 12 Proved breach of selection of employees 2 months for
year of tenure from 4 to 24 months bull Transition phase somewhat messy (old worker can
be reinstated new workers canrsquot) bull Push toward laquolast in first outraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 38
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
3 The Jobs Acts What Shall We expect
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 12
39
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
What Shall we expect out of the New Contract
bull The new contract reduces firing costs ndash The economic effects of reducing firing costs are well
understood bull Increase in both hiring and firing bull Increase in allocation of capital into productive jobs bull Not necessarily lower unemployment
bull But watch out the tax subsidy operating alongside will likely increase labour demand and reduce unemployment
bull What will happen when the tax subsidy will phase out
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 40
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Much Ado About Nothing
bull If the new contract will not necessarily reduce unemployment what is it so relevant
bull The main objective of the new contract should be ndash Reducing dualism ndash Reducing legal fights and red tape costs on labour
adjustment ndash Increase efficiency and allocation in labour market
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 41
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
What Shall we Monitor and expect in the Next Months
bull The jobs act will be successful if we will observe ndash Increase in share of Hires on a open ended basis over
total hires ndash Increasing speed of conversion temporaryopen ended ndash Reduction in legal fights over labour adjustments
bull Different timing between tax subsidy (January 1st) and new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 42
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
The first (meaningless) Evidence
bull Huge confusion and government propaganda over the first data
bull Two piece of information bull Labour Force Survey (monthlyquarterly compiled by
ISTAT) ndash Unemployment in February increased relatively to January
bull Osservatorio Precarietagrave (INPS) ndash Proportion of contract on a permanent basis substantially
higher bull Different timing between tax subsidy (January 1st) and
new contract (March 7th) gives room for identification
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 43
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 44
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Istat Total Employment is Falling
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 45
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Inps Share of new open ended hires (2015 versus past january february)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 46
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Summary of First Evidence
bull January and February 2015 only tax subsidy in place
bull March 2015 new contract in place bull Total employment is not rising bull Share of open ended contracts is rising bull Possible econometric evidence
ndash Difference in difference Around the 15 employees before and after March 2015 (small firms as a sort of control group)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 47
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
(IV) Open Challenges
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 48
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
0
10
20
30
40
50
60
70
80
90
100
GR LU ES IT PT UK NL SE FR IE AT DE BE DK FI
unemployed with work experience covered by unemployment insurance
Fonte EU-SILC 2004-2007
helliphelliphow many workers are effectively covered by unemployment benefits (Jobs Act part 2 other presentation)
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 49
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Wage and Seniority Hourly Wage (PPP) by Age
Labor Force Survey EUROSTAT 2002
8
10
12
14
16
18
lt30 30-39 40-49 50-59 60lt
EURO
Age interval
UK
GERMANY
SWEDEN
ITALY
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 50
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 51
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
helliphuge tax evasion
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 52
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Unemployment and shadow employment two faces of the same coin
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 53
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
School to Work Transition
Pre-primary primary and lower secondary education (levels 0-2)
Upper secondary and post-secondary non-tertiary education (levels 3 and 4)
First and second stage of tertiary education (levels 5 and 6)
European Union (27 countries)
99 73 51
Spain 102 88 70
France 98 66 46
Italy 136 104 98
United Kingdom
64 32 30
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 54
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-
Conclusions bull No Growth No jobs independently of the jobs act bull The Italian strategy was three fold i) tax subsidy on
new hirese ii) flexibile temporary contract iii) a new labour contract with protection increasing with tenure
bull Jobs act is very welcome ndash Lack of full coherence between ii) and iii) ndash What will happen when tax subsidy will end (fiscally may
not be sustainable ndash Other forms of non standard labour contract
bull Do not think that the jobs act is the laquoultimate labour reformraquo
Pietro Garibaldi- Conseil dorientation pour lemploi Jobs Act 55
- The Italian Labour Market and the 2015 Jobs ActWhat is it What will change
- Outline
- Diapositive numeacutero 3
- Diapositive numeacutero 4
- GPD The Never ending great recession13 quarters under
- Low labour Productivity Growth
- From the Great recessions to Long swings in in Unemploymenthellip
- Marginal Reforms and Honyemoon Effects Rationalize Swings in unemployment
- hellipwhat is happening to unemployment
- But long term unemployment is huge across age
- Youth Unemployment as in the worst South Eureopan Countries
- Share of Temporary Employment In Line with EU
- But Huge Share of self employedSelf employed in the statistics but employees de facto
- And high share of Youth Temporary
- Very Low Transition Rate into Open ended contracts
- Low Training in Dual CountriesShare of Youth Obtaining Training (20-24 years)
- Consequence of Dualism
- Diapositive numeacutero 18
- The Economics Intuition
- The Lobby of Labour Economists
- The Economics of Protection Increasing with Tenure
- Optimal Severance Payments and tenure in Theory
- 3 The Jobs Act31 The content32 Open Ended contracts with protection increasing with tenure
- Overall Comments
- The Jobs Acts and Other Legislative Initiatives
- 3 Jobs Act and Internal Architecture
- Tax Subsidy on New Hires
- Protection Increasing with Tenure
- Jobs Act and Increasing Protection
- Discriminatory Dismissals
- Economic Dismissal (I)
- Economic Dismissal (II)
- Disciplinary Dismissals
- Jobs act Reduces Uncertainty
- Open Issue and Risks (I) double moral hazard and disciplinary dismissals
- Risk IIWhat will happen to other nonstandard labour contract
- Risk IIIIs the Cursus Honorum too long
- Collective Dismsissal
- Diapositive numeacutero 39
- What Shall we expect out of the New Contract
- Much Ado About Nothing
- What Shall we Monitor and expect in the Next Months
- The first (meaningless) Evidence
- Diapositive numeacutero 44
- IstatTotal Employment is Falling
- Inps Share of new open ended hires(2015 versus past january february)
- Summary of First Evidence
- (IV) Open Challenges
- Diapositive numeacutero 49
- Wage and SeniorityHourly Wage (PPP) by AgeLabor Force Survey EUROSTAT 2002
- Tax subsidy is welcome in as much as it reduces huge labour taxes hellip
- helliphuge tax evasion
- Unemployment and shadow employment two faces of the same coin
- School to Work Transition
- Conclusions
-