Is there a minimum wage in Italy? Find out all the details in this article
The premise is simple: in Italy there is no minimum wage. But the overall picture is slightly more complicated than that.
What is the minimum wage in Italy?
As mentioned above, across the board there is no minimum wage in Italy. Instead, minimum wages are set through national collective bargaining agreements (NCBAs). These are sectoral agreements made between trade unions and employers associations on a national level which set guidelines, covering hours per week for example..
Some of the economic sectors that are covered by these agreements include metal work, hospitality, food, and insurance. The average hourly wage covered by these agreements is around 7 euros an hour although it varies slightly across the different sectors. The monthly salary of agricultural workers has been found to be one of the lowest across the sectors, at €874.65 per month.
Only around half the employees working in Italy are covered by an NBCA. NCBAs only apply to employers and employees in organisations that have actually signed them or have chosen to adhere to them. This means that people in some sectors who fall between the lines, by working for an organisation not covered by one for example, often face the prospect of receiving a low monthly salary, sometimes as low as €200-300 a month, especially for younger, more inexperienced workers. The current Italian government is committed to changing this however, and you can read more about that below.
Wage rates differ across the country as well between the north and south. For example, the majority of the 20 percent of underpaid agriculture and catering workers live in the south of the country. In general, before COVID-19 as well, unemployment had been falling in the country although this was largely due to the influx of more casual, underpaid work that does not include a permanent contract.
Across the whole of the private sector, the social security and pensions department (INPS) has admitted that 22% of workers earn less than a gross total of €9 per hour. They also noted that this figure does not account for often even poorer paid domestic or agricultural employees. Despite the current situation, the E.U. remains an economic powerhouse with employment rates steadily rising. Italy itself saw a rise in employment, nearly 300,000 jobs over 12 months and the 15 year outlook is expecting a continual increase.
How do Italian wage rates compare to other countries?
Well, compared to other EU countries Italy generally falls short. As of 1 January 2020 the minimum wage is €9.35 in Germany (30 cents higher than the previous year), while in France the hourly rate is €10.03 and both countries have laws that establish a minimum wage for workers. Even Belgium, while ranked 8th place by GDP (Italy is ranked 3rd behind Germany and France respectively), has an established minimum wage over €9 per hour.
There is an upside though, albeit a small one. The case law surrounding a minimum wage attempts to compensate for the lack of an official standard, i.e. even though there is no official minimum wage, the courts have been able to establish some precedent for one by referencing Article 36 of the Italian Constitution which reads: “Workers have the right to a remuneration commensurate to the quantity and quality of their work and in any case such as to ensure them and their families a free and dignified existence.” Modern Italy, the one established by this constitution after the Second World War, is founded on the idea of workers, and, as such, contains plenty of provisions establishing workers rights.
Check out also our article about working time in Italy for more informations.
How does Collective Bargaining work?
There are really two levels of Italian collective bargaining. The first are the NBCAs that apply to whole sectors, which are agreed upon to set the minimum standards of employment throughout the entire country and covers all of the workers within that sector. The conditions set out at this level of the bargaining structure include minimum wage rates, hours of work, classifying each area of work and also agreeing on conditions of employment.
The other level of collective bargaining is carried out at a regional, provincial or even company level. This decentralised level of bargaining accounts for the finer details, covering things like working conditions, employment contracts, performance standards and also bonuses for productivity and length of service.
Minimum wage rates agreed under NBCAs are adjusted annually according to inflation and they are reviewed and negotiated again every three years. The more local level agreements have less stringent timescales for renewal and review. However, following the agreement of a new NBCA, a firm or company will generally enter into negotiation with their employees on contractual terms. Bonuses and standards of productivity are generally looked at and agreed upon annually.
Could all of this all change soon?
The answer is yes. The Italian government is in favour of implementing a national minimum wage and a bill has been brought forward to parliament.Following the current trend of politicians active on social media, Deputy Prime Minister Luigi di Maio posted a statement on Facebook saying that it was his party’s objective to restore dignity to workers who are not receiving an income adequate to live on. He drew from an example of a small businessman who was offering €800 per month for 6 days of the week, with shifts between 8-10 hours. The calculation means the employer was offering less than €3 per hour. Di Maio characterised this as typical across the Italian economy and called for an end to wage slavery.
A bill was put forward in July 2019 to lay the foundations for a new minimum wage in Italy. The bill has not been ratified yet or set into law and it is still under debate, with Covid-19 significantly slowing down the democratic processes of the country. However the bill essentially indicates two different parameters that are necessary for the establishment of the new minimum wage.
The first of these is that the wage of the employee must be ‘fair’. This means that the total remuneration for the work provided by the employee must not fall below the level of the agreed minimum wage according to the NBCA of that sector. The second of these is a legal parameter that stipulates that at any time the total remuneration for an hours work in Italy cannot ever fall below a gross of 9€.
Within Italian democracy there are strong arguments for and against this bill. Unions are worried that introducing a mandatory minimum wage might reduce interest in adhering to collective bargaining agreements, as participation is not mandatory at this point. This would mean a large loss of power on the part of the unions in terms of being able to bargain for better workers’ wages.
Additionally, if Italy were to set the minimum to €9 it would have the potential to disrupt the entire system and all sectors would have to readjust to compensate for the increase. As it stands now, €9 an hour is very high considering the cost of living in most places of Italy when compared to those of Germany and France. With the new proposal it is also unclear if the new minimum wage will take into account Italy’s “13th month” system or the severance payment (trattamento di fine rapporto) which is equal to 7.4% of the employee’s annual salary. Until these two main issues are resolved the proposal can be expected to be reviewed and reworked.
What is the outlook?
In the end we’re hopeful that a minimum wage law will be implemented at some level. Increasing minimum wage rates ultimately leads to a higher standard of living. It stimulates economic growth by increasing spending, improves workers’ output, reduces turnover rates and generally increases workers’ happiness.
Check also our video about Italian salaries and how to calculate your net part.
After moving back to Italy from the United States in 2013, I realized how much an accounting and tax firm was needed to help expats living in Italy to comply with the local tax regulations.