Benchmarking Labour Market Performances and Policies

The recent EU initiatives on employment policy and the “Luxembourg employment strategy” underscore the relevance of benchmarking as an instrument for improving labour market performance and labour policy effectiveness. This paper presents the major results of a research project aimed at exploring the application of benchmarking techniques to convergence between the European labour markets. After synthetically describing the development of benchmarking techniques in the private and the public sectors, the paper addresses the crucial question of defining labour market performance and presents the possibility of creating labour market performance and policy benchmarks through the construction of efficiency frontiers. A second possibility explored is the radar-chart approach, a presentation technique that allows both for single dimension and overall performance monitoring. The paper then faces the problem of broadening the scope of benchmarking from the identification of benchmarks to the understanding of performance gaps through more comprehensive analytical tools. In this area, useful contributions are provided by the employment systems and the transitional labour markets approaches. The concluding section stresses the role of normative decisions, as well as the possible political challenges implied by a thorough application of benchmarking techniques to labour market convergence.     

The Management of Redundancies in Europe: The Case of Italy

The paper presents the findings of comparative and interdisciplinary legal and economic study on managing labour redundancies in seven EU member countries. It is structured for comparability between the systems examined. The introductory section contains an account of the evolution of the Italian labour market, with special reference to redundancy trends, of the features of the programmes for managing redundancies, of the roles of firms and the ‘external environment’ in handling workforce adjustments. The second section presents a map of policies that work to prevent labour redundancies (preventive measures) such as flexibility, training etc. Next, the instruments for handling temporary labour redundancies (retentive measures) are examined (e.g. short-time working, temporary layoffs etc.). The following section is devoted to instruments and programmes involved in the management of permanent labour redundancies (expulsive measures), e.g. collective dismissals, severance pay etc. The final section provides an overall assessment of the Italian system for managing labour redundancies, and briefly discusses the national debate on the prospects for reform, in light of the principles and policies of convergence set forth by the European Union.     

Technical Progress,Life of Capital and Employment

This paper examines the hypothesis of a quickening of capital replacement, triggered by the acceleration of technical progress. We present a microeconomic model of replacement processes inspired by the “unbalanced growth” school, highlighting the role of productivity in determining the growth path. The model distinguishes between two types of enterprise, stagnant and progressive, on the basis of productivity trends and shows that prolonged acceleration in the rate of technical progress may be sufficient reason for a rational entrepreneur to make replacements earlier, thus approaching a system of continuous restructuring. We then discuss the main theoretical implications for aggregate employment and the fundamental questions of measurability of the effects. To this end, we undertake an empirical test of aggregate data for the manufacturing sector in four leading economies (the United States, France, Germany, the United Kingdom) from 1970 to 1991. We estimate labour demand functions in which the traditional explanatory variables are supplemented by proxies that capture the effect of a shortening of the life of capital equipment (the replacement rate and the ratio between depreciation and gross fixed capital formation). The empirical evidence confirms the shortening of the average lifetime of capital and is consistent with the main implications of the microeconomic model. The results show, at least indirectly, a negative correlation between an increase in speed of technical progress and the growth of employment.     

A Structural Approach to the European Labour Market

The structure of the European labour market is highly differentiated by geo-graphical area. If the 1992 integration is likely to induce short-medium term adjustment effects on employment, these will mostly affect regional labour markets. Negative adjustments will follow different distribution patterns, probably exacerbating current regional disequilibria. On the other hand, still little known are the geographical features of the European economic, social and production structures. Although many studies have recently concentrated on the analysis of local labour markets, few of them have addressed the issue of Community regions. Through multivariate and cluster analyses of structural data on regional labour markets, the paper offers a confirmation of the explanatory power of local market analysis, as applied to the European area. The structural features of each elementary area are captured by three factors only that allow the construction of a coherent classification of EEC regions in four major clusters. This classification is used to identify the “weak areas” that, after a reconsideration in unified terms of European cooperation policies, should be the object of new development interventions.     

For a New Incomes Policy: New Possibilities and Objectives

Abstract. Moving off from the lessons of the Italian incomes policy experience of the 1980s, this paper presents a new framework to interpret the performance of incomes policy (LP) agreements and institutions, and propose new strategies for the 1990s. IP is viewed as a cooperative outcome that evolves from a non-cooperative long-term game between several players (workers, unions, firms, government, parliament, etc.), along the lines of the model drawn up by Brunetta and Carraro (1988). The paper is divided into three sections. The first summarizes the history of IP in Italy, starting from the phase of the predetermination of disinflation (1983-84). We firstly outline some of the fundamental features of recent Italian development (the “Italian model”), noting how new IP measures could be taken to create an adequate response to the new European and international deadlines. The difficulties and uncertainties that presently exist at both national and international level make the introduction of IP in new, cooperative and evolutive terms, necessary. The second section examines the various topics and new objectives of a “strategic” IP resumption, particularly relevant to the concerted action on the cost of labour, presently being discussed. The topics we consider are: the link between wage reform and IP; the recent concerted agreements reached on fiscal drag (26.1.89) and on the cost of labour (25.1 and 6.7.90); the importance of the role of productivity gain-sharing; programmed inflation and price control; indexation of gross wages and safeguarding the net wage; increase of the tax base; profit-sharing. The third and final section presents a few observations which further investigate the distribution of productivity gains between sectors and uses: how it is articulated amongst the various bargaining levels (central, sectoral or enterprise). Redistribution amongst sectors is dealt with in terms of “protected” and “unprotected” areas of the economy, showing the need of a concerted regulation at the central level. Sharing between factors and allocations presents a very different case, and is dealt with at sectoral and firm level.     

Employment Protection and Labour Market Segmentation: the Fiftieth Anniversary of the “Cassa Integrazione Guadagni”

Abstract. This paper analyzes the evolution of the Cassa integrazione guadagni (CIG), according to 7 different theoretical models, which offer a classification for the different cases of application that have developed since its introduction, as well as for the many policy targets pursued by the Public Authorities. Then an assessment of the economic role of CIG is attempted, divided into three separate sections. The first is aimed at evaluating the economic long-term effect on macro performance, where the crucial balance is between a “crowding-out effect” on private investment and a “profit-maintenance effect” by lowering the effective wage rate. The second section approaches the employment consequences of the CIG by examining a second crucial balance: that between the protection granted to the employed and the obstacles raised for the employment of the non-employed (above all, freezing workers' turnover). This issue is tackled too in terms of the insider-outsider theory, showing the possible relevance of CIG in segmenting the labour market and keeping the wage rate dynamics. Finally the paper briefly examines the profound revision of the CIG recently approved by the Italian Parliament, aimed at avoiding excessive costs while enhancing labour mobility.