Opting Out, Collective Contracts and Labour Flexibility: Firm‐Level Evidence for The Italian Case
| Author | Fabrizio Pompei,Andrea Ricci,Mirella Damiani |
| Date | 01 September 2020 |
| DOI | http://doi.org/10.1111/bjir.12510 |
| Published date | 01 September 2020 |
British Journal of Industrial Relations doi: 10.1111/bjir.12510
58:3 September 2020 0007–1080 pp. 558–586
Opting Out, Collective Contracts
and Labour Flexibility: Firm-Level
Evidence for The Italian Case
Mirella Damiani , Fabrizio Pompei
and Andrea Ricci
Abstract
This articleanalyses the role of deviations from higher level collective agreements
adopted in firm-level bargaining to regain higher labour mobility, net positive
employment eects and a resurgence of labour productivity. Using Italian firm-
level data, after performing preliminary pooled ordinary least squares and fixed
eects estimates, we adopt a dierence-in-dierence approach combined with
a propensity score matching. All the estimations show that opting out clauses
notably increases both hiring and separations, but without significant variations
in terms of net employment. In addition, no significant labour productivity gains
are obtained. The only significant change concerns the increase in the share of
temporary workers.
1. Introduction
In the last few years, dierent types of firm-level derogations from national
and sectoral collective bargaining have received growing attention in many
European countries,particularly since the 2008 economic crisis. In response to
high unemployment rates,academics and policy makers have maintained that
firms need more flexibility in bargaining processes (European Commission
2015). ‘Controlled forms of deviation(opening, derogation, deviation clauses)
as well as less controlled forms (such as general opt-out clauses) have
been interpreted as major aspects of the trend towards more decentralized
bargaining and a strengthening of flexibility of collective agreements that
began in the early 1990s in WesternEurope’ (Eurofound 2015, p.32). Since the
Mirella Damiani is at Department of Political Sciences, Universityof Perugia. Fabrizio Pompei
is at Department of Economics, University of Perugia. Andrea Ricci is at National Institute for
Public Policy Innovation(INAPP).
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2019 John Wiley & Sons Ltd.
Opting Out, Collective Contracts and Labour Flexibility 559
Great Recession,these dierent types of deviations have been accompanied by
temporary derogationsfrom national norms and rules set at the sectoral level.1
The theme of opting out contributes to the discussion of the functioning
of two-tier bargaining systems in which multi-employer agreements coexist
with firm level or territorial agreements (Boeri 2014). These collective
bargaining systems are still the object of an on-going debate. Two opposing
positions seem to have emerged. On the one hand, employers and their
organizations emphasize that the decentralization of collective bargaining
may remove overly rigid pay and working conditions that have reduced
firm competitiveness and caused wide job destruction, especially since the
2008 crisis, and accelerated global competition. On the other hand, workers
and their representatives signal that derogations from norms and sectoral
agreements might cause only the deteriorationof pay and working conditions,
resulting in unfair competition, and the loss of the solidarity dimension of
collective bargaining beyond the enterprise level (Eurofound 2015, p. 31).
Furthermore, bargaining rules facilitatingthe adoption of more flexible fixed-
term contracts (FTCs) may reduce the incentives to invest in firm-specific
human capital for both employers and employees (Pinelli et al. 2017).
Concerning the actual ecacy of general opt-out clauses (OPTC), recent
studies — which are mostly available for the German case — have explored
their role in explaining the sensitivity of wages to firm-level performance
(OECD 2017a). Fewer studies have been devoted to analysing the impact of
OPTC on labour workingconditions and their eects on job growth (Br¨
andle
and Heinbach 2013). Totally absent, at least to our knowledge, is research on
the actual influence of opting out on the structure of labour demand (open-
ended and fixed-term employees) and on the resurgenceof labour productivity
growth.
Our main research question is to shed light on the Italian case and test the
role of OPTC on various dimensions of firm-level labourflexibility, that is the
share of FTCs on total firm-level employment, labour flows (both creation
and destruction of jobs), net job growth and labour productivity.
The Italian experience is valuable in addressing this issue because in this
country, after the new norms adopted in 2011 (Article 8, Law 148/2011),
firms were allowed to derogate from lawsand sectoral agreements on working
time and conditions for temporary employment. In the context of policy
evaluation, we intend to verify whether the predominant aims of derogations
from sectoral agreements have been adjustments in working time to obtain
higher job growth rates and improve productivity or if OPTC have favoured
mainly the adoption of temporary contracts through a substitution eect with
permanent contracts.
Finally,we test whether OPTC, favouring temporary jobs, haveencouraged
a selection mechanism of more skilled and motivated workers with positive
productivity eects or have been associated with low levels of retention and
motivation of temporary sta.
We examine these issues using rich firm-level panel data obtained through
an employer and employee survey (Rilevazione su Imprese e Lavoro, RIL)
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2019 John Wiley& Sons Ltd.
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