Industrial Relations In Italy

loses its ability to be flexible (Mintzberg 1979). According to Minetti (2011) In Italy, a high percentage of companies are family-owned, and particularly given from generation to generation. Companies always faced similar conditions within the economy and therefore focused on formalization. Further, organizations already know external factors such as relationships with suppliers or customers, legal restrictions, competitors, substitutes and market barriers (Porter 2008). Those factors might be known so the company develops reluctance towards change and is hence, limited in growth.

Family-owned businesses aim for high centralization. According to Lawrence (1983), the focus on centralization leads apart from several advantages to three main

Italy’s rigid labour laws often stand in direct opposition to the natural progression of the complex system related to the labour market, which need constant adaptation to economic changes and transformation in social norms with the consequence that both firms and the workforce are damaged (Melchiorre & Rocca 2013).

High taxes on labour discourage employment: the Italy’s tax wedge, according to Eurostat, is the fourth largest in the Eurozone and the highest referring to its implicit tax rate on labour. In addition, Italy’s service sector is heavily cartelized: the amount of regulation in the professional service sector has remained the highest during the years (OECD 2012): this erects barriers to new competition and increases the levels of bureaucracy. Among the several examples, taxis and pharmacists can be cited as one of the most protected

Employers have little choice in setting wages because national collective bargaining contracts by sector regulate workers’ pay across the entire country. These contracts define minimum wages every two years for entire industries, ignoring the differences in costs of living and the divergences in labour productivity between regions (Amendola, Vecchi & Al Kiswani 2009).

Special attention is required for regulations concerning dismissal that are the most restrictive laws relating to the labour market: the most important is the Article 18 of the Statuto dei Lavoratori (Workers Statute), which is applied to all workers on full-time permanent contracts employed within businesses with more than 15 employees. In order to terminate an employee’s full-time permanent contract, the law states that the employer must demonstrates that the employee in question has failed in fulfilling his expected performance and he must prove concrete negligence of the employee in carrying out the work’s obligations. If a labour judge states that there was no just cause for dismissal, Article 18 requires the employer to rehire the employee and compensate him or her for all lost wages and social contributions (Melchiorre & Rocca 2013). Italy is the only country in Europe that does not offer the employer a choice between reintegrating the employee and paying an