The organizational consequences of democracy : labor unions and economic reforms in contemporary Italy

Abstract

Introduction: This dissertation deals with the recent strategic and organizational transformation of the Italian labor movement. The wave of strikes that swept all West-European countries between the late 1960s and the early 1970s lasted longer in Italy than anywhere else in the world and its effects were much more incisive. 1 The Italian unions emerged from the so-called "Hot Autumn" as much stronger organizations, well-rooted at the enterprise level, and animated by a radical, transformative ideology.Their goal was not just improving the wages and working conditions of the Italian workers but rather promoting a "social revolution" in the country. During the 1970s and 1980s, the behavior of these unions proved to be incompatible with the long-term stability of an open, capitalist economy. Wages grew faster that productivity. Consequently, Italy's inflation rates were higher than all other international competitors. The competitiveness of Italian goods on international markets fell while import penetration increased. Profit margins declined and with them, both capital accumulation and growth rates declined as well. Strike levels were higher than in all other advanced countries. Union demands for expansionary social policies spurred similar requests by other social groups and thus, caused the opening of a (growing) gap between public expenditures and tax receipts. Finally, unlike other unions in Central and Northern Europe, the Italian unions refused to come to terms with Italy's many macroeconomic imbalances by accepting wage moderation and promoting centralized collective bargaining. Beginning with the early 1990s, the Italian kbor movement radically changed its bargaining behavior and firmly embraced the cause of cooperation with management and government forces. In 1993, the Italian unions signed an incomes policies protocol aimed at bringing about centralized control of nominal wage growth. This agreement has been credited with greatly facilitating the process of macroeconomic adjustment in Italy. In 1995 and 1997, they agreed to important reforms of the state pension system. In 1996, they signed a so-called "pact for employment" - a pact aimed at creating favorable investment conditions in underdeveloped areas through flexibility in hiring and firing and the reduction of wage levels below national minima. In sum, the Italian union movement completely reshaped itself in less than ten years. How do we understand this sudden and perhaps even unexpected strategic reversal from conflict to cooperation?