An Exit Strategy for the Precarious Generation

Everybody agreed that the Italian labor markets needs to be fixed. But that was about all the speakers agreed on during the third debate of Economia e società aperta 2010 (The Economy and the Open Society), a series of discussions organized by Università Bocconi jointly with Corriere della Sera, Italy's newspaper of reference.

The debate focused on the issue of temp workers (also known as "the precarious") and the rising numbers of the unemployed. A picture of the situation was given by Tito Boeri, labor economist at Bocconi, who introduced the session. Since the start of the recession,. 800,000 jobs have been shed, and in 4 out of 5 cases it's people under non-standard, i.e. temporary, employment contracts. The precarious are mostly young. Since 2007, youth unemployment has climbed by ten percentage points, reaching the staggering figure of 27%. Furthermore, less than 4% of the unemployed with less than 30 years of age are paid unemployment benefits.

An exit strategy must be found for the precarious generation trapped into underpaid jobs and unemployment. Boeri proposed three measures: "First of all, the process of entry into the labor market must be changed, for instance by reconciling the flexibility requested by employers with the need for stability expressed by employees with the introduction of a single contract having labor guarantees growing through time. Wages would also be positively affected by the introduction of a statutory minimum wage. Finally, the whole Italian welfare system needs to be overhauled, by introducing a single unemployment benefit equal for all".

The debated was moderated by Dario Di Vico, journalist of Corriere, who opened the discussion commemorating the death of Marco Biagi, who "paid with his life his commitment to reform the market for labor."

"We all agree something needs to be done. There is a widespread perception that this kind of labor market isn't working," said Michele Tiraboschi, who teaches Labor Law at University of Modena and Reggio Emilia. "But it's not only a matter of rules and laws to be changed, but an issue of progress of our country and quality of our human capital. In the recent past, we have excessively focused on legal interventionism. We have to work on matching labor demand with labor supply. We have to encourage people to learn hard crafts and actual professions, not just jobs."

"The true safeguard against the precarization of labor is the employability of people, which means investing in the country's development and the training of workers," explained Fiorella Kostoris, who teaches economics in Rome at Università La Sapienza. "The real problem of our labor market is not the recent crisis, but the stagnation that has affected our country for too long."

Kostoris said she is favorable to Boeri's proposal of generalized unemployment compensation, but she warned that a single labor contract should not introduce additional rigidity. "We must flexibilize not only the entry into, but also exit out of the labor market, by laying off labor in excess, while avoiding to socially dramatic situations by extending social transfers and re-training the unemployed."