Faced with galloping inflation, the salaries of Italians have depleted more than elsewhere. Italy is the OECD country in which workers’ wages have lost greater purchasing power, also because half of the employees’ contracts have expired for over two years and there is no minimum wage in Italy. And yet, despite the slowdown in payroll, we are among the countries that have least protested against the high cost of living.
To say it is the OECD’s Employment Outlook 2023, which certified yes the rebound in the labor market after Covid-19, but with a loss of momentum between 2022 and early 2023 in a general context of economic slowdown. Total employment increased in the last year, with an increase of 1.7 percent in May 2023 compared to May 2022. However, the Italian employment rate remains well below the OECD average: 61 percent against 69 .9 percent.
But the most worrying are Italian wages. Russian aggression against Ukraine has contributed to soaring inflation, which has not, however, been accompanied by a corresponding growth in nominal wages. Real wages (how much one’s salary can actually buy, considering rising prices) have decreased in practically all OECD countries – by an average of 3.8 per cent in one year – but Italy is the country that has recorded the steepest drop among major economies: since the end of 2022, Italian real wages have fallen by 7.5 percent compared to the period before the pandemic.
“Contractual wages have grown nominally less than in France or Germany,” explains Andrea Garnero, OECD economist. “This factor fits into an already weak economy, such as the Italian one, in which productivity has grown less and the scope for wage increases is lower”.
But the absence of the minimum wage also counts, explain the OECD. “Where they exist, minimum wages have on average kept pace with inflation better,” Garnero explains. “In fact, the data say that they have increased by thirty percent of the nominal value in the last two and a half years, therefore also slightly above the +24 percent of inflation”.
In the note referring to Italy, the OECD does not express itself on the advisability of the Italian government introducing a minimum wage, an issue which is being discussed a lot these days. “It is certain that, compared to collective bargaining, the data clearly say that minimum wages have been more able to keep up with inflation,” Garnero points out. “The minimum wage-collective bargaining mix can coexist, as many countries demonstrate. To date, the situation is one of profound inequality: on the one hand we have renewed contracts, indexed to consumer prices, which protect some workers well, and then outside there is the desert of the Tartars and save whoever can”.
In Italy, wages fixed by collective agreements decreased in real terms by more than six per cent in 2022 alone, continuing to lose value in 2023. Also because, contrary to other countries that have shorter contract renewals, from us collective agreements are renewed every three years, with a longer time gap, making it even more difficult for wages to keep up with price growth. If delays in renewals are added to this regulatory framework in practice, the damage is done: over fifty percent of workers today are covered by a contract that has expired for over two years, thus risking prolonging the loss of power of purchase for many workers.
This is a particularly significant drop when one considers that, unlike in other countries, collective bargaining in theory covers all employees. According to OECD projections, not surprisingly, nominal wages in Italy will increase by 3.7 percent in 2023, practically almost half compared to inflation which is expected to reach 6.4 percent.
And all this is taking place in a context of relative “social peace” compared to the larger and louder protests witnessed in other countries, from France to the United Kingdom. In the report, the OECD dedicates a part to working days lost due to mobilizations and protests in defense of wages. In Italy, apart from the general strikes against the budget law and some categories of workers being arrested, no one took to the streets to ask for contract renewals and salary increases. But in some countries, the protests worked. In Norway, in April, after a four-day strike, an agreement was reached for a 5.2 percent increase in wages in the manufacturing sector.
