«Jobs Act» in three points Presentation for IBM Conference Milan, December 5th, 2014

Jobs Act main points 1) Flexibility in labor market entry and exit: Incentivize open-ended contracts through the reduction of individual dismissals’ regulations. 2) Social protection schemes: Extend subsidies to all workers and make them proportional to one’s contributions 3) Employment services and activation policies: National agency to centralize management of policies

Jobs Act three steps 1) Decree (Poletti after the name of the minister) – March 2014 Liberalized the use of fixed term contracts and apprenticeships 2) Law – now in Parliament approved yesterday Contains the 3 points 3) Enforcing Decrees – Necessarily from January 1 st, 2015 because incentives to open-ended contracts: a full exemption of social security contributions only for all open-ended contracts signed next year (2015) and for the next three years.

Fornero Law 2012 Fixed term contract: 12 months with no justification of the reason Individual Dismissals: compensation only in case of unfair dismissal gross monthly salary reinstatement in the job in the most serious cases of dismissals either disciplin. or economic Aspi: fully paid to employees, significantly reduced for collaborators Employment services (public and private): new principles laid down

Jobs Act 2015 Fixed term contract: 36 months, with no justification of the reason. Cancel co.co.pro contracts Individual Dismissals: Compensation always 1 month gross pay/year of service reinstatement in the job just in one special case of disciplinary dismissal Aspi: aiming to equal treatment for employees and collaborators Employment services (public and private): actual implementation

1) Individual dismissals

Individual dismissals Dismissals for economic reasons: Fast-track settlement compensation offered to the employee is equal to 1 gross monthly salary per year of tenure; if the employee accepts the issue is settled, else the court. In any case the firm pays a small share of ASPI (now), of active policies (tomorrow?): bridge to active policies Dismissals for disciplinary reasons: compensation equal to maximum amount provided in case of ordinary dismissal, within a minimum of 3 gross monthly salary and a maximum of 24. Except for non-existing breach of conduct which leads to reinstatement.

2) Social protection schemes Bringing back short time work scheme (cassa integrazione) CIG to its original function: Temporary support i.e. CIG only for 2 years; Closing the “CIG by way of derogation”; Universal insurance for firms above 15 employees. Widening the unemployment benefits and making them proportional to contributions: a new “ASPI” 8

New unemployment benefits: Naspi Weeks of contributions Months of subsidies

3) Activation policies A national agency in charge of - defining employment services standards - checking on compliance with the standards National and private services need to be complementary. Payment of agencies only upon re-employment of workers Joint action of active and passive policies by means of effective tools: firms pay upon dismissal voucher to be spent only in active policies

Benefits of the reform Prediction of open-ended contracts subsidized next year: not necessarily additional but substitutive of fixed-term and co.co.co Reform of CIG and extension of ASPI Active labor market policies

Possible criticisms Block of across-firm mobility: for fear of losing art. 18 protection. Every year ½ million voluntary changes of open- ended contracts in firms above 15 employees over a stock of 15 million contracts. Liberalization of fixed term contracts: has been criticized because in apparent contrast with the promise to incentivize open-ended contracts. Reinstatement for illegitimate dismissal for disciplinary motives: possible incentive for firms to use only dismissals for economic reasons and for workers to go to court claiming that actually the dismissal is for disciplinary reasons. Temporary subsidies only in 2015 : may distort firms’ decisions.