Identifier
Created
Classification
Origin
03ROME2177
2003-05-16 12:42:00
UNCLASSIFIED
Embassy Rome
Cable title:  

METALWORKERS' PACT MAY SPUR BROADER LABOR

Tags:  ELAB ECON IT 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 ROME 002177 

SIPDIS

DOL FOR ILAB/BRUMFIELD
DEPARTMENT FOR DRL/IL AND EUR/WE

E.O. 12958: N/A
TAGS: ELAB ECON ECON IT IT ELAB
SUBJECT: METALWORKERS' PACT MAY SPUR BROADER LABOR
FLEXIBILITY
UNCLASSIFIED


PAGE 02 ROME 02177 01 OF 02 161244Z

REF: ROME 1889

UNCLAS SECTION 01 OF 02 ROME 002177

SIPDIS

DOL FOR ILAB/BRUMFIELD
DEPARTMENT FOR DRL/IL AND EUR/WE

E.O. 12958: N/A
TAGS: ELAB ECON ECON IT IT ELAB
SUBJECT: METALWORKERS' PACT MAY SPUR BROADER LABOR
FLEXIBILITY
UNCLASSIFIED


PAGE 02 ROME 02177 01 OF 02 161244Z

REF: ROME 1889


1. SUMMARY: A NEW SECTORAL LABOR CONTRACT FOR ITALY'S
METALWORKERS HAMMERED OUT MAY 8 HAS REVERBERATED ACROSS THE
BUSINESS AND LABOR LANDSCAPE. BOTH ITS CONTENT AND
NEGOTIATION ARE IMPORTANT STEPS FORWARD IN MODERNIZING
TRADITIONAL PRACTICES AND POLICIES THAT HAVE LONG BEDEVILED
THE ITALIAN ECONOMY. LABOR'S SPLIT OVER THE PACT HAS
RENEWED CALLS BY THE SECTOR'S LARGEST, MOST MILITANT
FEDERATION FOR LEGISLATION REQUIRING VERIFICATION OF UNIONS'
ACTUAL REPRESENTATION WITHIN A SECTOR. AT A MINIMUM, THE
PACT OFFERS AT LEAST ONE INDUSTRIAL SECTOR THE PROSPECT OF
RELAXING THE RIGID NATIONAL CONTRACTS THAT HAVE STIFLED WAGE
FLEXIBILITY AND LIMITED PRODUCTIVITY GAINS, TWO FREQUENT
DRAGS ON ITALIAN COMPETITIVENESS. MOREOVER, ITS INNOVATIVE
PROVISIONS MAY CARRY OVER AS PRECEDENTS INTO RENEGOTIATION
THIS SUMMER OF ITALY'S GLOBAL PACT GOVERNING COLLECTIVE
BARGAINING AGREEMENTS, A PROSPECT THAT HAS THE THREE MAIN
LABOR CONFEDERATIONS WRESTLING OVER THE SHAPE OF THEIR
FUTURE RELATIONSHIP WITH MANAGEMENT.


2. FEDERMECCANICA, THE METAL MANUFACTURERS' ASSOCIATION,
SIGNED A NEW SECTORAL CONTRACT WITH TWO OF ITALY'S THREE
PRINCIPAL METALWORKER FEDERATIONS MAY 8. THE NEW CONTRACT
HAS BEEN HAILED AS AN INNOVATIVE DEPARTURE FROM PAST
SECTORAL AGREEMENTS. THE SPECIFICS SUPPORT THAT ASSESSMENT,
IN THAT THE CONTRACT:

- REPLACES RIGID WAGE INDEXATION TO GOVERNMENT INFLATION
PROJECTIONS WITH A SET OF PRE-NEGOTIATED ADJUSTMENTS DERIVED
UNCLASSIFIED

PAGE 03 ROME 02177 01 OF 02 161244Z
FROM CURRENT INFLATION ESTIMATES;
- CREATES A NEW LABOR-MANAGEMENT COUNCIL TO MANAGE TRAINING
AND OTHER LABOR SERVICES WITHIN THE SECTOR;

- AUTHORIZES OVERHAUL OF A 30-YEAR POSITION CLASSIFICATION
SYSTEM, WITH THE IDEA OF ELIMINATING A RIGID 7-TIER
STRUCTURE IN FAVOR OF MORE FLEXIBLE SYSTEM OF PAY 'BANDS."

THE CONTRACT ALSO INCLUDES PROVISIONS THAT WILL PERMIT
LOCAL/REGIONAL BONUSES FOR PRODUCTIVITY INCREASES; PRIOR
CONTRACTS REQUIRED THE MAIN PORTION OF PRODUCTIVITY BONUSES

TO BE APPORTIONED NATIONALLY TO ALL SECTORAL WORKERS.


3. NOT SURPRISINGLY, THE PACT'S MOST INNOVATIVE PROVISIONS
FUELED FURTHER DISCORD AMONG THE UNION CONFEDERATIONS. THE
DEAL PROVOKED AN ANGRY REBUTTAL FROM FIOM, THE LARGEST
METALWORKERS FEDERATION (WITH SOME 30% OF ALL EMPLOYEES IN
THE SECTOR, AND OVER HALF OF UNIONIZED WORKERS, ON ITS
ROLLS). FIOM'S PARENT CONFEDERATION, CGIL, IS ITALY'S
LARGEST AND MOST MILITANT TRADE UNION CONFEDERATION. IT HAS
LONG OPPOSED ANY CHANGES TO ITALY'S TRADITIONAL PRACTICE OF
NATIONAL CONTRACTS THAT SET WAGES, BONUSES AND WORK
CONDITIONS FOR ALL WORKERS, FEARING THEY WOULD ERODE
WORKERS' WAGES/LIVING STANDARDS AS EMPLOYERS SHOP FOR THE
LOWEST POSSIBLE LABOR COSTS IN THE COUNTRY. THE OTHER
CONFEDERATIONS' AGREEMENT TO THE CONTRACT NOT ONLY LEAVES
FIOM/CGIL STANDING ALONE IN PRINCIPLE; IT ALSO LEAVES THE
FEDERATION CONFRONTING A LEGALLY-BINDING CONTRACT THAT
APPLIES TO ITS MEMBERS AS WELL.


4. ALTHOUGH ITALY'S CONSTITUTION UPHOLDS THE CONCEPT OF
UNCLASSIFIED

PAGE 04 ROME 02177 01 OF 02 161244Z
COLLECTIVE REPRESENTATIVE CONTRACTS THAT APPLY TO ALL
WORKERS IN A SECTOR, PARLIAMENT HAS NEVER ADOPTED
LEGISLATION TO IMPLEMENT THE PRINCIPLE IN PRACTICE. AS A
RESULT, THE JUDICIARY STANDS AS SOLE ARBITER OF WHETHER A
CONTRACT IS VALID AND "REPRESENTATIVE." PAST RULINGS
GENERALLY HAVE DEEMED LABOR AGREEMENTS NEGOTIATED AND SIGNED
BY UNIONS AFFILIATED WITH THE MAIN CONFEDERATIONS, EVEN IF
THEY REPRESENT A MINORITY OF WORKERS, AS REPRESENTATIVE AND
APPLICABLE TO ALL WORKERS IN THE SECTOR. FIOM/CGIL IS
EXPECTED TO EMPLOY DECIDEDLY ITALIAN TACTICS TO CONFRONT THE
"IMPOSED CONTRACT," NOISILY STRIKING TO PROTEST THE NEW
PACT'S PROVISIONS AND THREATENING TO CHALLENGE LEGALLY ITS
APPLICABILITY WHILE ITS MEMBERS QUIETLY POCKET THE WAGE
INCREASES (WHICH IT CLAIMED WERE INADEQUATE) PROVIDED UNDER
THE AGREEMENT.


5. EMPLOYERS ARE PLEASED, VIEWING THE AGREEMENT AS THE FIRST
PRACTICAL MANIFESTATION OF THE OTHER TWO UNION
CONFEDERATIONS' COMMITMENT TO A NEW TYPE OF LABOR-MANAGEMENT
COOPERATION. THAT COMMITMENT WAS FIRST AGREED BY THE
GOVERNMENT, THE TWO CONFEDERATIONS AND EMPLOYERS IN LAST
SUMMER'S "PACT FOR ITALY," A BROAD STATEMENT OF PRINCIPLES
THAT FIRST SPLIT THE THREE LABOR CONFEDERATIONS (WITH CGIL
REFUSING TO SIGN AND STRIKING IN PROTEST). EMPLOYERS'

UNCLASSIFIED

UNCLASSIFIED PTQ9032

PAGE 01 ROME 02177 02 OF 02 161244Z
ACTION DRL-01

INFO LOG-00 AGRE-00 AID-00 CEA-01 CIAE-00 COME-00 CTME-00
INL-00 DODE-00 ITCE-00 DOTE-00 ANHR-00 SRPP-00 EB-00
EXME-00 EUR-00 E-00 FAAE-00 UTED-00 VC-00 FRB-00
H-01 TEDE-00 INR-00 ITC-01 LAB-01 L-00 VCE-00
AC-01 NSAE-00 NSCE-00 OMB-01 OPIC-01 ACE-00 SP-00
SSO-00 SS-00 STR-00 TEST-00 TRSE-00 USIE-00 G-00
SAS-00 /008W
-------------- 66324C 161319Z /38
R 161242Z MAY 03
FM AMEMBASSY ROME
TO SECSTATE WASHDC 9959
DEPT OF LABOR WASHDC
INFO LABOR COLLECTIVE
EUROPEAN POLITICAL COLLECTIVE
AMCONSUL MILAN
AMCONSUL FLORENCE
AMCONSUL NAPLES

UNCLAS SECTION 02 OF 02 ROME 002177

SIPDIS

DOL FOR ILAB/BRUMFIELD
DEPARTMENT FOR DRL/IL AND EUR/WE

E.O. 12958: N/A
TAGS: ELAB ECON ECON IT IT ELAB
SUBJECT: METALWORKERS' PACT MAY SPUR BROADER LABOR
FLEXIBILITY
UNCLASSIFIED

PAGE 02 ROME 02177 02 OF 02 161244Z

ASSOCIATIONS BELIEVE THE METALWORKERS CONTRACT WILL
STIMULATE BUSINESS AND INVESTMENT AND, PERHAPS, STIMULATE
GROWTH IN SOUTHERN ITALY BY ALLOWING COMPANIES TO TAKE
ADVANTAGE OF REGIONAL INCOME/COST-OF-LIVING DISPARITIES.


6. EVEN AS IMMEDIATE ATTENTION SHIFTS TO NEGOTIATION OF
OTHER SECTORAL CONTRACTS, BOTH LABOR AND MANAGEMENT HAVE
THEIR GAZES FIXED FIRMLY ON RENEGOTIATION LATER THIS SUMMER
OF THE UMBRELLA ACCORD GOVERNING THE TERMS OF COLLECTIVE
BARGAINING AGREEMENTS. THE PARTIES TO THE METALWORKERS
CONTRACT WILL WORK TO EMBED ITS PROVISIONS IN THIS UPDATED
UMBRELLA AGREEMENT; CGIL WILL TRY TO ENSURE THEY ARE
CONFINED TO THIS ONE SECTOR.


7. THE AGREEMENT WILL PROVOKE DEBATE, IF NOT MUCH MOVEMENT,
ON LONG-MORIBUND LEGISLATION TO FLESH OUT THE CONSTITUTIONAL
PROVISION GUARANTEEING REPRESENTATIVE CONTRACTS. FIOM/CGIL
AND LIKE-MINDED LEGISLATORS FROM THE FAR LEFT HAVE VOWED TO
PRESS FOR THE LEGISLATION'S PASSAGE. CISL, THE SECOND
LARGEST, "CATHOLIC" CONFEDERATION, HAS DENOUNCED THIS AS A
GAMBIT TO GIVE THE FEDERATION, ITALY'S LARGEST, DE FACTO
VETO POWER OVER ANY FUTURE CONTRACT; IT ARGUES THAT LABOR
AND MANAGEMENT SHOULD WORK OUT A MUTUALLY-ACCEPTABLE
SOLUTION WITHOUT INVOLVING PARLIAMENT. THE SMALLEST OF THE
THREE CONFEDERATIONS, CENTRIST UIL PRIVATELY AGREES WITH
CGIL'S POSITION BUT IS HOLDING ITS TONGUE FOR TACTICAL
REASONS.


8. COMMENT: THE METALWORKERS' INNOVATIVE CONTRACT IS
ANOTHER SIGN THAT THE MOST SUCCESSFUL ASPECT OF THE
UNCLASSIFIED

PAGE 03 ROME 02177 02 OF 02 161244Z
BERLUSCONI GOVERNMENT'S COMPREHENSIVE REFORM PLAN WILL BE IN
THE AREA OF LABOR MARKETS (REFTEL). IN SOME RESPECTS,
THAT'S NOT SURPRISING, SINCE THE REFORMS TO DATE COME
LARGELY WITH SUPPORT OF MUCH OF ORGANIZED LABOR; GIVEN
ITALY'S TRADITION AND CULTURE OF CONSENSUS DECISION-MAKING,
THE IMPORTANCE OF THAT SUPPORT SHOULDN'T BE UNDERESTIMATED.
TO TRY TO MAINTAIN THAT APPROACH, EMPLOYERS MAY WELL DECIDE
TO ACCEPT A MORE LIMITED SET OF THESE INNOVATIONS IN THE NEW
ACCORD GOVERNING COLLECTIVE BARGAINING AGREEMENTS IN ORDER
TO SECURE CGIL'S APPROVAL. THE GOVERNMENT FACES A MUCH
TOUGHER TEST ON PENSION REFORM GIVEN THE CONFEDERATIONS'
UNIFIED OPPOSITION TO MOST OF ITS PROPOSED LEGISLATION
(SEPTEL). THE OUTCOME OF THAT DEBATE WILL GO A LONG WAY TO
DETERMINING WHETHER THE BERLUSCONI REFORM SCORECARD WILL BE
MODEST OR MEANINGFUL. THERE'S LITTLE LIKELIHOOD THAT CGIL'S
PUSH FOR REPRESENTATIVE CONTACT LEGISLATION WILL AMOUNT TO
ANYTHING; SPLITS AMONG THE CONFEDERATIONS MIRROR THOSE
WITHIN THE CENTER-LEFT OPPOSITION, AND THE GOVERNMENT'S
PARLIAMENTARY MAJORITY IS SUFFICIENT IN ANY CASE TO REJECT
AN UNWANTED BILL.

SEMBLER

UNCLASSIFIED

>
2003ROME02177 - Classification: UNCLASSIFIED