The latest episode in the great Italian pension reform saga, featuring welfare minister Roberto Maroni, his fellow cabinet member Gianni Alemanno, the three leading unions Ggil, Cisl and Uil – not to mention the opposition – has been keeping the country engrossed recently. It is a saga which has, of course, already seen people taking to the streets in protest.
And apart from anything it seems that the whole debate has generated more heat than light – with most of the talking taking place in the media.
Amendments to the controversial pension reform, which had seemed all but impossible at the start of the year, could come about after all. All this is in contrast to the hard line taken by Maroni at the start of January.
At the beginning of 2004, the welfare minister had insisted, on more than one occasion, that the government had come up with the best deal for the pension reform, waiving away the prospect of new talks with the three leading trade unions.
Maroni had also raised a few eyebrows describing the meetings as “talks called for by the unions to tell the government of their doubts on the reform” rather than proper consultations. “I rule out a negotiation for which I see no reasonable chance of coming to an agreement,” Maroni said at the time.
But it was the welfare minister himself, a member of the Lega Nord party, who fuelled speculation about possible changes with remarks in February which indicated he was willing “ to make changes” and meet the three leading trade unions, Cigl, Cisl and Uil.
The much-discussed pensions reform, approved by the lower chamber of the parliament, the Camera dei Deputati, in February 2003, proposes to tackle the problem of the pension expense curve caused by the rapidly ageing Italian work force. The “gobba”, as the curve is nicknamed, is estimated to hit 16% of gross national product in 2033.
Among the measures put forward by prime minister Silvio Berlusconi features the increase of the retirement age by five years and the introduction of incentives to encourage employees to work longer. Persuading workers to sign up to pension funds was also a priority. According to the proposed bill, the contribution rate for the first pillar would be cut from 32% to 27%, a solution known as “decontribuzione”.
The government also suggested the investment of the “trattamento di fine rapporto”, or TFR, an indemnity given to the workers at the end of the employment, in the recently constituted second pillar. Professor Marcello Messori, the head of Mefop, the association of pension funds, says such a measure is “unacceptable”.
Messori says a good compromise to the problem of making the second pillar strong without putting TFR in danger would be what Mefop put forward – the commonly known as “silent consent”. ‘Silenzio assenso’ would allow the investment of TFR unless the holder explicitly forbade it and has so far proved controversial. But the three leading unions seem to be convinced.
The unions prefer this approach instead of the government’s proposed compulsory investment of TFR.
Cigl, Confererazione italiana generale del lavoro, Cisl, Confederazione italiana sindacati lavoratori and Uil, Unione Italiana del Lavoro, are all for ‘silenzio assenso’, says Cisl’ s national pension secretary, Pierpaolo Baretta. The unions have so far pursued a strategy of common opposition to the three pivotal aspects of the reform, Baretta says.
Baretta, who attends meetings with the government on behalf of Cisl, explains in some detail the unions’ opposition to the compulsory investment of the TFR indemnity, the reduction in the first pillar’s contribution rate – known as “decontribuzione”, as well as the definition of eligible pension age.
On the TFR question, Baretta says, the government has given an “informal assurance” that the ‘silenzio assenzo’ principle would be eventually accepted.
But the decontribuzione matter could prove more problematic. As things stand now, every worker in Italy pays 32% of his monthly wages into his first pillar pension, of which eight percent is paid by the worker and 24% by the employer.
“The government has proposed to cut the ratio to 27% – five points. The unions say ‘No’ not so much to the cut of a contribution, which will be eventually cut, but more because it came so abruptly and therefore means an abrupt reduction of the first_pillar pensions,” he explains.
Baretta also says that he had been told that the Senato, the upper chamber of the parliament, which was in the process of discussing the question, has decided to do away with the decontribuzione. If true a “positive thing”, Baretta says.
The government, for its part, describes the decontribuzione matter as a measure “to boost the employment of young workers” – though it acknowledges the strong opposition of the trade unions.
Deciding a common line on the age of retirement has so far proven more of a challenge. At the moment workers who have accrued 40 years of contributions are allowed to retire, as those workers who have paid in contributions for 35 years and are 57 years of age – this system is called the “double channel of retirement”.
The reform would bring about a “single track” allowing men to retire at 65 and women at 60, an age when they are expected to have accrued 40 years of contributions.
The unions agree in opposing the change, but in different ways. Cisl, would be in favour of bringing the eligibility threshold up to 58 or 59 years of age, Baretta explains. But he adds: “This last point has been the focus of extensive political debate.”
Pensions-related cracks within the government coalition became visible in early February. Just days after the opposition said they had prepared an alternative pension reform, yet another cabinet member, Gianni Alemanno, dropped hints that his Alleanza Nazionale party also had ideas for a “more fair” pension reform.
This was not the first time that Alemanno and Maroni have had aired contrasting viewpoints on pensions reform through the press. For example, Alemanno had been reported as saying the unions’ lobbying for negotiations was, after all “legitimate”. Maroni’s reply was curt: “If someone prefers that the reform never takes place, he would better say it clearly.” And he claims to be astonished that his colleague had voted in favour of the disegno di legge at the end of the summer.
Of course, it’s not only those in power who have something to say on the reform matter. Says Tiziano Treu of the Margherita, part of the coalition of centre-left parties of the opposition: “Margherita is committed to make constructive proposal on the subject pensions and it is currently working with other political forces of the opposition Lista_Unitaria.
The International Monetary Fund welcomes the country’s proposed pension reforms, but is urging the government to ensure full implementation – as do employers group Confindustria and the Organisation for Economic Cooperation.
For its part, Confindustria is seeking an end to all the uncertainty. General secretary Stefano Parisi says a speedy implementation of pension reform would be instrumental in “giving new confidence to the country”.
Uil’s pension secretary, Adriano Musi, perhaps sums the whole situation up best. “The range of options that we have in a democracy is like a keyboard, a strike is only one key.”