Recent developments of Italy�s industrial relations system

The article reviews the recent developments of Italy�s industrial relations system, covering both bargaining rules and outcomes. An increasing fragmentation is observable in collective bargaining at the national level, with the spread of new agreements amongst small and recently created associations of workers and employers, leading to lower labor costs. The role of decentralized bargaining has remained secondary and subordinate to the provisions decided at the national level, although several - gradually more generous tax breaks have been introduced in order to encourage the diffusion of firm-level wages. Giving decentralized bargaining a greater role in setting wages and in labour organization would allow for a better alignment of wage growth and increases in productivity, relaxing some of the rigidity in national bargaining, especially in terms of the duration of agreements and of the automatic indexing mechanisms, which risk making inflation more persistent.