employment policies for displaced workers in italy and in lombardia

Employment policies for displaced workers in Italy and in Lombardia

Manuela Samek Lodovici

IRS - Istituto per la Ricerca Sociale

Warsaw, Jan. 18 2008

Monitoring Labour Market Reforms II3 Workshop

Benchmarking employment services for displaced workers

Introduction Risk factors for employment are no longer exclusively concentrated in cyclical negative phases, but also in expansive cycles, because of globalisation issues: increased capital mobility, competition with low wage countries freedom of multinationals to invest everywhere on the international

scene fluctuations in the goods demand technological change flexible forms of employment

Companies response strategies (Outsourcing; Off-shoring; Internal Restructuring; Bankruptcy / Closure; Mergers and Acquisitions) may also have a negative impact on the volume of the labour force employed.

Main causes of loss of employment in Europe

Causes %

Internal restructuring 76,2%

Bankruptcy and closure 13,3%

Off-shoring 4,8%

Mergers and Acquisitions

3%

Outsourcing 2,5%

Source: - European Commission - (Report 2004) – Estimations on European Restructuring Monitor (ERM) Data

Characteristics of displaced workers Individual characteristics such as age, sex,

education and occupation configure a set of different risks/ opportunities in the labour market which should be considered in the design of measures aimed at displaced workers

Disadvantaged groups (older workers, women, individuals with low education, immigrants) are at higher risk of displacement and long term unemployment. They need targeted measures, different from those aimed at stronger groups of workers.

Policy responses

As a consequence, policies adopted in favour of the displaced workers have been changing, becoming: faster in activation (because crises are less

predictable)more flexible and targeted (the needs of

businesses and workers are less standardised)

more institutionalised (the need for action is constant).

Policies to support displaced workers

DIMENSIONS Level Who When How To whom

APPROACHES Individual / Collective

Participatory /

Unilateral

Anticipatory /

Reactive

Integrated /Homogenous

Generalised/

Targeted

• Dimensions of the interventions aimed at displaced workers and approaches

Level: Individual or Collective dismissals

Policies mix are different according to the dimension of the layoffs: individual or collective.

With collective layoffs usually social visibility is higher and this implies: more generous income support and diversified active policies, a higher number of actors involved (usually including trade unions), a higher amount of resources available.

Individual lay offs usually are only supported by income support (ordinary unemployment benefits).

Here we consider policies aimed at collective lay offs

Who: the actors involved Participatory/Unilateral Approach

"Participatory" approach: Involvement of all the actors (trade unions and workers,

employers, public and private outplacement agencies) to identify solutions and to manage redundancies going beyond what is strictly required by the law.

It can also be referred to cases of cooperation and partnership between public and private (interim agencies, service companies, etc.).

“Unilateral” approach Interventions are a "prerogative" of a single “institution”

(usually the local authority and the body responsible for the income support measures, the trade union representing the workers’ interests, etc.. ), therefore it doesn’t allow the development of a shared strategy.

When: Timing of the interventions Anticipatory / Reactive Approach

"Anticipatory” approach:When the causes that lead to a crisis are in some way

predictable, the solutions have the advantage of being able to play "in advance”, retraining the workers risking to be displaced so that they can be more attractive for other companies.

This approach also helps preventing the obsolescence of the workers’ skill, as well as psychological discouragement which reduces the activation of the workers (and consequently the chance of success of policies).

“Reactive” approach: It intervenes when processes are already underway, in the

attempt to contrast their negative effects.

How: Tools of the interventions Integrated / Homogeneous

Approach“Integrated” approach:

Combination of multiple measures: from income support (passive policies), to active measures such as information, guidance, training and incentives for recruitment, psychological counselling activities.

“Homogeneous” approach:intervention that uses only one measure: prevailing

income support or vocational training, etc.

To whom: Beneficiaries of the interventions Generalised /

Targeted Approach The outcomes of a process of employment reintegration vary

significantly depending on whether it has been addressed to all the displaced workers (generalised approach) or only to socially and economically weaker displaced workers (targeted approach).

This distinction allows to monitor: Dead loss effects: when results could have been achieved even without

intervention, through market mechanisms; Replacement effects: when companies would have assumed, but not the

persons involved in employment policies; Displacement effect: when the hiring would have occurred, but in other

companies.

The Italian case: Policies to support displaced workers/1

Both in Italy and in Lombardia, in recent years displacement risks have been growing due to increasing international competition, technological innovation and to the increase in temporary and non standard forms of employment.

In the Italian welfare system, mainly based on the insurance principle (therefore not universalistic), the generosity of the benefits depends on the duration and the amount of the contributions. Hence, the type of contract and the actual length of employment, which

is closely related to the nature of the contract (permanent or fixed term), are the first discrimination variables.

There are categories of workers (such as collaborators and first job seekers) completely uncovered by unemployment benefits in case of unemployment, and others (interim workers) for whom the "most generous" institutions are not applied.

The Italian case:policies to support displaced workers/2

The Italian model of social protection against unemployment is however rather advanced for displaced workers with long employment histories.

It is possible to use “temporary layoffs” with generous income support for workers in case of temporary crisis or restructuring (Cassa Integrazione Guadagni) and/or mobility benefits in case of collective dismissals which are much more generous that ordinary unemployment benefits.

On the other hand, active labour market policies are not very developed, especially in Southern Italy


Ordinary unemployment

benefits


benefits

with reduced requirements

CIGO

(Cassa Integrazioni Guadagni Ordinaria)

CIGS


Mobility benefits

Terms and conditions

•Parasubordinate workers are excluded•Allowed to interim workers•At least 2 years of contribution and 52 weeks of payments in the two years preceding the date of termination

•Parasubordinate workers are excluded•Allowed to interim workers•Having worked at least 78 days•Being insured for at least two years and can rely on at least a weekly contribution before the two years preceding the year of the request

Reserved only to employees with permanent contract

•Reserved only to employees with permanent contract•Granted for 12, 18 or 24 months depending on the reasons of termination (with exceptions)•Being employed in industrial enterprises employing more than 15 employees (50 in the trade industry) in the previous half

•Reserved only to employees with permanent contract•Tenure of at least 12 months•At least six months of actual work



benefits


benefits

with reduced requirements

CIGO


CIGS


Mobility benefits

Limitations • in 2001 increased at 7 months for under 50 and 10 months for over 50.•50% of the pay of the last three months for the first seven months, then 40% and 30%.

•It is for a number of days equal to those worked in the previous year (max 156)

It can not exceed 30% of the average daily pay•(with limits)

•Granted for a maximum of 13 weeks, with eventual further extensions of up to 12 months (24 in some areas)•Equal to 80% of total remuneration that would have been entitled to the worked hours

Equal to 80% of the total remuneration that would have been entitled to the performed working hours

•The benefit may not exceed the tenure•For the first 12 months, the amount is equal to the CIGS, for further periods becomes 80%

Displaced workers in ItalyIn Italy many individuals find a job through relational

networks which are more difficult to activate for the discouraged (long-term unemployed) or people with limited relational networks (immigrants, but also less educated women or women re-entering in the labour market).

There are “disadvantaged" categories of workers requiring (targeted) interventions different from those that can be used, with success, with other groups of unemployed (for example, workers with more than 40 years)

Most of the unemployed with previous working experience have lost their job for the ending of a temporary work.

The Italian case: recent trends

In recent years Outplacement Projects have been activated, aimed at workers in mobility with special conditions of weakness in the labour market.

Outplacement projects present interesting forms of collaboration between public and private employment services to support re – employment of workers expelled from production processes (especially small businesses). Cooperation among PES and authorized and accredited outplacement agencies operating at local level.

Workers involved are identified by PES in accordance with the conditions of weakness in the labour market (gender, age, title study,…….).

Outplacement Agencies try to qualify expertise and skills of the weaker workers identified by PES and to support the matching between job opportunities identified and worker professional profile.

Lombardia: recent trends Lombardia In 2005:

Employment rate (population 15-64 years) 65,9% Unemployment rate 3,8%

Main reasons for losing the job are: “dismissal or mobility” (49,5%) the end of fixed term contracts (31,8%)

Displaced workers in 2006 in Lombardia, (ISTAT Micro-data) : Displaced workers 24.920 Unemployed due to end of temporary job 16.006 Unemployed receiving ordinary unemployment benefits2.720 (11%) Unemployed receiving mobility benefits2.189 (9%)

Workers in CIG (temporary dismissed with in come support) 14.362

Lombardia: main characteristics of the displaced workers with income support

(CIG)Among those who have not worked because in

“Cassa Integrazione Guadagni”:Men and women are almost equally distributed

(7,346 men against 7,286 women).The share of older workers is significant: the

majority age cohort is the 45- 54 years (49.6%). Also relevant is the share of individuals belonging to the 55-64 cohort (13,7%).

More than two thirds (64,5%) have a low education level (at maximum primary education)

Lombardia: main characteristics of dismissed workers

The younger cohorts are far more represented among the unemployed without income support: they are 36% of the unemployed, but only 7% of those in CIG

Despite the young age, the level of education is low (people with at maximum the primary education amounts to 60,4%).

This could indicate that we are facing a particularly disadvantaged contingent of young people who have left school early.

Policy suggestions/1

The analysis of specific cases of policies aimed at displaced workers in Lombardi, show that it is important for success to have:

Rapidity of response and prevention (anticipation)Integration of income support and active measures, to

enable displaced workers to attend constantly to training or guidance courses and to verify if beneficiaries of benefits are seeking actively a job.

Participative approaches involving all relevant actors (especially PES and Private Outplacement agencies and involving the trade unions) are more effective: lower conflict and targeted measures;

Policy suggestions/2

Targeted and rapid interventions for the weakest segments of displaced workers and non standard workers are needed, because their degree of social protection is quite poor.

A necessary pre-requirement of any policy is also to have updated and complete databases on the labour market trends and flows, especially at the local level, to allow anticipation of crisis and a coherent planning of the interventions, adequate resources.

employment policies for displaced workers in italy and in lombardia

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