The global labor market has been evolving at a rapid pace, with many countries grappling with the challenge of balancing flexibility and stability. During the second edition of AFSRU Conference, HR Insights Forum, Driving Success through People, Mr. Tiziano Treu, Professor Emeritus of Labour Law at the Catholic University of Milan, former Minister of Labour and Social Security and Minister of Trasportation in the Italian Government, Senator of Italian Republic, President of XI Commission (Labour and Welfare) of the Senate, presented the Italian best practices, highlighting the journey, successes, and lessons learned over 27 years of developing and regulating temporary work in Italy. His speech offered a detailed overview of how Italy managed to create a system that ensures flexibility without sacrificing security and stability for workers and companies alike.
The Early Days: Addressing Concerns About Flexibility
The Italian temporary work model was born amid significant challenges, primarily due to concerns from labor unions. As Mr. Treu pointed out:
“Temporary work began amid many difficulties. There were concerns, especially from the unions, which are very strong in Italy… the concern was that there would be too much flexibility, leading to a lack of stability.”
To address these issues, lawmakers in 1997 introduced regulations that imposed strict limits on temporary work arrangements.
“Our lawmakers imposed many limits on temporary work because they wanted to prevent the risks of excessive flexibility,” explained Mr. Treu.
These regulations ensured that the system would not become exploitative, providing two main guarantees: equal treatment between temporary and permanent workers and a robust training fund.
A Joint Approach: Workers and Employers Alike
One of the pillars of the Italian model’s success was the creation of a training fund, managed jointly by representatives of workers and companies. Mr. Treu described it as:
“A very rich training fund, with 4% of the payroll allocated to it… an enormous amount. I don’t believe any country invests 4% in training.”
This commitment to training was a gamble that paid off, providing a way to continuously upskill the workforce and keep them competitive in a changing market.
The model also placed great emphasis on collaboration between private agencies and public employment centers, fostering a partnership that has become crucial in today’s labor market.
“We have a regional system… the regions set specific conditions for agencies, not only for authorization but also for collaboration with the public employment centers,” Mr. Treu noted.
This has allowed for a more streamlined integration of public and private efforts in matching job seekers with employers.
Combining Stability with Flexibility: The Concept of Flexicurity
One of the most innovative aspects of the Italian model is what Mr. Treu described as “flexicurity”—a combination of flexibility and security. Temporary work in Italy is not just about short-term assignments; many temporary workers are on permanent contracts with agencies. They are then sent on temporary assignments to various companies.
“This combines stability at the root with temporary assignments, which is very interesting. This is flexicurity, meaning flexibility with security,” Mr. Treu stated.
This approach ensures that workers have the security of a permanent contract, while companies can benefit from the flexibility of short-term assignments. Over time, this model has proven effective in managing workforce fluctuations and ensuring that temporary work does not become a “trap” of continuously unstable employment.
The Importance of Regulation and Training
The Italian system’s success can be attributed largely to strict regulations and a focus on training. As Mr. Treu explained:
“Authorization from the Ministry was required, and the criteria are still very strict. We still have fewer than 100 agencies, but the top five hold 70% of the market.”
These regulations ensure that agencies remain reliable and trustworthy partners, which has built confidence among all stakeholders, including labor unions.
Training also plays a critical role.
“Just look at the numbers: 320,000 workers trained in ’23. That’s quite a figure,” said Mr. Treu.
The training fund, which is jointly managed, allows for efficient and targeted upskilling of workers based on the specific needs of companies.
“There are general rules, and then individual companies and agencies can specify their training needs… Training is then organized specifically for these cases, making it efficient,” he added.
Addressing Modern Challenges: Green and Digital Transitions
In his speech Mr. Treu also touched on the new challenges the labor market faces, particularly the green and digital transitions.
“The green transition and the digital transition, the two major transformations of our time, will displace thousands of workers, even those employed by regular companies,” Mr. Treu said.
He emphasized the role of agencies in helping workers transition from declining industries to emerging ones, noting that redeployment is now “multiplied tenfold.”
Flexibility as a Macro-Economic Stabilizer
One of the most significant takeaways from Mr. Treu’s speech was the role of temporary work as a macroeconomic stabilizer.
“When the economic cycle goes down, it holds up better than the average, and when it goes up, it doesn’t go crazy. It is a macroeconomic stabilizer, which is very important in a time like this,” he stated.
The system’s ability to adjust without drastic fluctuations has helped maintain stability, even during periods of economic uncertainty.
A Success Story That Took Time
Reflecting on the progress of the Italian model, Mr. Treu concluded with an optimistic yet realistic outlook.
“I am here to say that the Italian case is a success story. It can be done. Italy may not be the world champion in other aspects of the labor market… but this is one of the cases where we are doing quite well. It doesn’t happen overnight. It takes time, patience, 27 years, or even less. But it requires effort, and working together, if possible, because if everyone pulls in their own direction, we don’t go straight; we go sideways.”
This message is a powerful reminder of the importance of collaboration, regulation, and training in creating a labor market that is both flexible and secure. The Italian model serves as an example of how a well-thought-out system can bring benefits to workers, companies, and the economy as a whole.
Conclusion
The journey of the Italian temporary work model is a testament to the power of adaptability, collaboration, and regulation. By addressing initial concerns with strict guidelines, fostering public-private partnerships, and emphasizing continuous training, Italy has developed a system where flexibility does not compromise stability.
As Mr. Treu eloquently put it:
“Flexibility can be both a strength and a challenge, but true success lies in creating a balance where flexibility brings stability, opportunity, and growth for everyone involved.”
This balance is something that labor markets worldwide can aspire to, and the Italian experience shows that, with effort and patience, it is indeed possible.
Key Takeaways:
- Balancing Flexibility and Security:
- The Italian model emphasizes “flexicurity,” combining the flexibility of temporary work with the stability of permanent contracts. This approach ensures that temporary work does not lead to a cycle of instability for workers.
- Strong Regulatory Framework:
- Strict regulations have been essential in maintaining a fair and balanced temporary work system. Only reliable and well-regulated agencies are permitted to operate, which has helped build trust among companies, workers, and unions.
- Collaborative Approach:
- Successful collaboration between public employment centers and private agencies has been a cornerstone of the model, fostering efficient job matching and comprehensive workforce management.
- Investment in Training:
- A robust training fund, allocating 4% of payroll, has been key to upskilling workers and ensuring they remain competitive. The training is tailored to meet the specific needs of companies, making it efficient and effective.
- Role as an Economic Stabilizer:
- Temporary work in Italy has served as a macroeconomic stabilizer, adapting smoothly to economic cycles without causing drastic fluctuations. This has been crucial during times of economic uncertainty.
- Addressing Modern Challenges:
- The system has adapted to address emerging challenges, such as the green and digital transitions, by supporting the redeployment of workers from declining industries to growing sectors.
- Long-term Success Built on Patience and Collaboration:
- The Italian model is a result of 27 years of careful planning, regulation, and cooperation. It demonstrates that sustainable success requires time, effort, and a willingness to work together.
- Global Relevance:
- The Italian experience serves as a valuable example for other countries, showing that with the right balance of flexibility, regulation, and training, a labor market can thrive in a constantly evolving world.
