Italy: New labour decree promises less taxes but more precarity

Rome: The opposition and labour unions oppose the new labour decree adopted Monday by Prime Minister Giorgia Meloni’s government that introduces new tax cuts, saying it would only spur more precarity.

The day before the decree was adopted, the unions complained about the government’s last-minute invitation to the debate, saying this had left them no time to propose changes.

“On Labour Day, the government chooses to work and give answers to those who legitimately aspire to change their position, and we do so with a series of articulated measures, the most important of all being the tax cut on labour”, Meloni said in a video posted on social media.

Through the decree, the tax cut that benefits all workers was raised from 3% to 7% for people earning up to €25,000 and from 2% to 6% for those earning up to €35,000 – resulting in a boost of €100 per month on average from July to December.

In 2023, €142 million will be allocated to raise to €3,000 the tax-free threshold for untaxed company bonuses for all employees with minor children “to support families by limiting the impact of inflation on incomes,” the ministry writes.

“We invest in workers and families (…) It is a real help against the high cost of living and a concrete answer to the chatter. Additional benefits also come into effect for workers who have children. We continue on the responsible path of growth by focusing on social emergencies”, said Economy Minister Giancarlo Giorgetti (League/ID).

About €5.4 billion will be dedicated to starting the Inclusion Allowance for households with minors, disabled or elderly over 60. It will be implemented on 1 January 2024, following the total elimination of the Citizenship Income – a controversial measure introduced by the 5-Star Movement.

The Allowance, provided for 18 months with a possible extension for another 12, could reach up to €500 per month and €630 in special conditions – to which €280 will be added if the family are renters. Only residents in Italy for at least five years with an average income below €9,360 will benefit.

The government also plans to assist Italians searching for work via the “Work Activation Instrument”, which will provide training courses, vocational qualifications or substitute community service. To be in a position to enter the world of work following the training, trainees are to receive a non-renewable aid of €350 for a duration of up to 12 months from 1 September.

Employers will also benefit from tax breaks to encourage hiring people on apprenticeships or open-ended contracts.

The threshold of vouchers for the payment of occasional services is also raised (up to €15,000), and there will be fewer constraints on the reasons for renewals of fixed-term contracts.

“The objective was certainly not to make the use of these tools more precarious, but to make it easier to interpret a rule that currently has difficulties in application”, explained Labour Minister Marina Elvira Calderone at the end of the Council of Ministers.

“This is a legislative government. Ours are not spot interventions; we have a vision”, the minister added.

Opposition and union criticism

The main trade unions, which had already complained that they were not consulted on time by the government, are now announcing a battle.

“The measures decided by the government do not go in the direction we demanded. We will continue the united mobilisation and, if we don’t get answers, we are all ready to continue mobilisation together until we get the results we need”, CGIL Secretary Maurizio Landini said during the demonstration organised in Potenza to celebrate Labour and Workers’ Day.

“We will continue until we win. They have not won, and they will not win”, he added from the stage.

On the side of the opposition, the Democratic Party accuses the government of “waging war on the poor, not poverty” and promises a battle for the introduction of the minimum wage, the abolition of free internships and “an end to pirate contracts that open the door to exploitation”.

“Only secure, decent and well-paid work can defeat inequality and protect families from the most unfair of taxes, inflation”, said Congresswoman Debora Serracchiani (PD/S&D), noting “cuts to public health and schools” in particular.

The new labour decree “massively extends the use of precarious forms of work, dismantles the support measure that prevented one million people from falling into poverty and allocates insufficient resources for a significant cut in labour costs,” Serracchiani said.

Five-Star Movement leader and former prime minister Giuseppe Conte made similar statements and called on the government to “reconnect with reality”.

Conte announced that a protest should be organised in June to protest the government’s new decree, its dismantling of the Citizenship Income, and to support the introduction of a minimum wage in Italy.