Divided views on raising the retirement age
Politicians, trade unions and employers have different opinions on the desirability of further reforms, finds Maria Teresa Cometto
In November 2008 the European Court of Justice demanded that Italy abolish differences between women's and men's retirement age in the public sector. That could have provided the opportunity to rethink the whole problem of retirement age, which at 60 years for women and 65 for men is seen as being too low for both genders when compared with current life expectancies. But the parties in power were reluctant to tackle the problem.
In his White Book published in May 2008 on the return to office of prime minister Silvio Berlusconi, welfare minister Maurizio Sacconi recognised that the public budget for pensions was becoming larger than expected, and that the most important requirement was to increase the retirement age, including that for women. But Sacconi has made clear that he is also convinced that Italian women today are discriminated against in the workplace and do not have adequate public services to help them cope with a job and family duties, and that these problems must be addressed before women's retirement age was raised.
However, his colleague Renato Brunetta, the minister in charge of public employees, holds the opposite view. He would like to unify the retirement age for men and women at 65 immediately. And such an itiative was certainly not thought to be a good move ahead of June's European parliamentary election. Indeed, Treasury minister Giulio Tremonti went so far as to deny that there was a pension problem. "It's a very good system, it's not at risk," he was reported as saying.
Nevertheless, employers' association Confindustria and the central bank, the Banca d'Italia, were less sanguine. Confindustria chairwoman Emma Marcegaglia stressed to its annual meeting in May that Italy spent too much for public pensions - almost 16% of GDP compared with an average of 9.5% for other western countries. "The only sustainable way to defend retirement benefits and find the necessary resources to grow is working longer," she concluded.
And addressing the Banca d'Italia's annual meeting a few days later, governor Mario Draghi highlighted the latest report from the state budget office which found that at the end of 2010 the cost of public pensions was likely to be 16% of GDP - 1.1% more than anticipated. It also projected that it might not be until after 2055 that it would fall to 14%, and then it could be too late. Draghi urged immediate action, including an increase in the retirement age.
However, Dario Franceschini, the leader of the left-of-centre opposition Democratic Party (PD), has made it clear that he does not think the pension system's problems are a priority and that the PD's focus was on improving general welfare benefits, such as unemployment payment for all workers, including part-timers and employees with short-term contracts, the so-called ‘precarious' workers.
The CGIL, the PD-linked trade union confederation and Italy's largest, has said it is also against simply increasing the retirement age. Instead, it would like to revise how pension benefits are annually adjusted because, since the Amato reforms of the mid-1990s, the system's benchmark has been GDP growth rather than inflation and trade unionists fear that retirees would get poorer in light of expectat-ions that GDP would decline and inflation rise. In addition, post-reform benefits were based on contributions and so all young workers would end up with inadequate public pensions in 20 to 30 years from now. CGIL leader Guglielmo Epifani has said that the unions may be open to discuss the retirement age when these problems were solved.
However, the more centrist CISL, the other major trade union grouping, takes a different approach. Its leader Raffaele Bonanni asked its annual meeting for the go-ahead to start a new round of negotiations about the pension system with the government, Confindustria and other unions and added that raising the retirement age "is not taboo".
One simple measure that could be adopted immediately would be the restoration of the retirement age rules drafted in legislation by the previous Berlusconi administration's welfare minister Roberto Maroni. That foresaw raising the retirement age to 62 but it was reduced to 58 by the Romano Prodi administration that was in office between the last two Berlusconi terms. However, Berlusconi doesn't see any new pension reform as politically feasible. And he has gone on record as saying: "When workers risk losing their jobs, talking about working longer is not a positive move."
"I think that in the end nothing will change," says Giuliano Cazzola, deputy chairman of the House of Representatives' labour committee and chairman of the welfare committee of the ruling People of Freedom (PdL) party, and a former head of the CGIL and of the pension authority (Covip) board.
Cazzola has proposed a bill to address the retirement age and the future benefits of the precarious workers, and that age limits should be flexible and the same for men and women at between 62 and 67, depending on contributions.
But he concedes that this is not a popular initiative. "Sacconi does not want to touch the public pension system during a recession, when its benefits provide a sort of social shock-absorber to families affected by the crisis." He adds that there is a total lack of any public discussion about what to do about pension funds.
Last year, while celebrating its tenth birthday, Cometa, the largest industry-wide pension fund, Sacconi promised to promote a debate with the trade unions and employers to evaluate Italian pension funds' experience and develop them further. But that project never took off.
"Today in Italy nobody has the courage to talk about pension funds", says Cazzola. "Since the new TFR rules came into force in 2007, everybody has been silent on the topic."