“The risk is that we fall into a price-wage spiral with rising prices causing rising wages which in turn fuels inflation. In his annual speech on the country’s situation at the end of May, the Governor of the Central Bank of Italy spoke of inflation which had never been so high since 1986, approaching 7%. A situation common to all its neighbors. But Italy is distinguished by the particularly low level of wages.
Wage stagnation for three decades
It is the only European country where wages have, on average, fallen over the past thirty years. A drop of 3% while they jumped 34% in Germany, 31% in France and 6% in Spain. This is explained by the weakness of transalpine growth but above all by that of its productivity which has only increased by 10% since 1995 against 40% in the euro zone. Istat estimates that this year, while salaries will show a timid increase of 0.8%, inflation will cause the purchasing power of Italians to fall by 5%. Mario Draghi calls on the social partners to resume dialogue as quickly as possible to develop a “wage pact which must be discussed by everyone: government, companies and unions. One of the three cannot ignore the other two. Their relationship is for the moment a real dialogue of the deaf.
Rising wages versus lowering taxes
“Companies must increase wages,” say in unison Mario Draghi and his Minister of Labour, Andrea Orlando. The latter is worried about a possible halt in household consumption and the worsening of the social crisis. He wants to make the aid requested by companies to cope with the consequences of the war in Ukraine conditional on an increase in wages. This is the only way, according to him, to prevent Italy from experiencing its third recession in ten years. “Let Confindustria decide! the minister is impatient. Our country is suffering from a loss of competitiveness that we thought could be curbed by flexible labor costs. This strategy did not work. »
Words that provoke the indignation of employers. The latter advocates a reduction in the tax burden, which is one of the highest in OECD countries. “The government is ignoring the reality of the productive world which is the first to suffer from the crisis caused by the war in Ukraine with 30% of businesses at risk of disappearing. The solution to raise wages is a structural tax cut. »
The debate on the minimum wage revived
“Hire more and pay more, don’t save on wages because that can only aggravate the brain drain”, launches the Minister of Business Innovation, Vittorio Colao, also a former manager of Vodafone, castigating the corporate selfishness. The Minister of Labour, for his part, issued an ultimatum demanding the opening of negotiations as soon as possible on the establishment of a minimum wage, otherwise the government could present a law in complete autonomy. Unions and employers are resisting, arguing that they have always conducted contract negotiations covering 97% of employees in the private sector and 99.3% of those in the public sector.
Italy is one of the last countries in Europe not to have a minimum wage. “It has become an emergency,” said Maurizio Landini, general secretary of the main transalpine union (CGIL). The central theme at the moment is income protection and rising wages. But a fundamental theme remains too often forgotten: the precariousness of work and the fact that a million young people have left our country. »
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