The first decree from the Jobs Act that was approved in December 2014 (c.f. article No. 8763) will replace most cases of employee re-instatement due to unfair dismissal (Article 18 of the Workers Statute) with a compensation ceiling linked to the new ‘indefinite employment contracts with rising levels of social protection’. The new employment contract will become valid as soon as it is published in the Official Journal (for more on this project c.f. article No. 8814), which is expected to be in February 2105. It is part of Mateo Renzi’s plan to increase flexibility in a labor market considered to be “too rigid and too segmented” compared with other Eurozone countries’ labor markets. This decree does not go far enough for those who favor completely doing away with the re-instatement provision whilst trade unions view the decree as opening up an avenue to arbitrary redundancies. Economists’ opinions are mixed over the impact of this decree.
Rigid labor market or not. Renzi’s Government considers labor market entry and exit flexibility essential for job creation. However Riccardo Realfonzo (Economist at the University del Sannio) maintains that this argument is not scientifically valid. In his opinion the concept of ‘super protection’ for Italian workers is unfounded. Using OECD data he calculated an Employment Protection Legislation Index (EPL) that measures the degree of overall employment protection the countries studied. He...
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