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Relaunching Construction, Reducing Labor Costs, Increasing Pay: is it Possible? The construction sector in Italy is passing through a dramatic phase (see article on p. 5). The economic constrictions imposed by the global crisis and the grave state of public finances have not spared it. What is more, the largely held conviction is that, absent an economic upturn, the problems are bound to become worse, and construction is the recession-curing sector par excellence. The urgent need to confront the wave of speculation which threatens to damage the most vulnerable countries is forcing an advance on the announced 25 billion-euro rescue measure. It may somehow succeed in providing the situation with a quick fix, but in order to be able to navigate the open seas safely over the next few years, Italy will have to undertake the reforms it truly needs, balancing budgetary discipline with economic stimulus. We remain a manufacturing-based country dependent on exports. In the current conditions of global, open markets, productivity and labor costs play a central role. For companies, reducing labor costs is a categorical imperative; for employees, it is safeguarding their jobs and income. In my opinion, labor costs should be reduced by at least 15% by making cuts in national insurance contributions and sick leave costs. Except in the service sector, employees sick leave is entirely the responsibility of the employer (reducing the amount to two-thirds of current pay would undoubtedly have the added effect of reducing absenteeism). A drastic reduction in the complications involved in the administration of work relations could further reduce labor costs, thus leading to a safeguarding of existing jobs and most likely the creation of new ones. For workers in companies on the open markets of international competition, the dream of variable, independent pay proved short-lived. Thus, questions of compatibility have arisen quickly on their own, unlike in the case of public employees and protected areas. Under the hypothesis alluded to above, the employee could receive a raise in relation to: lower pension contributions, in order to partially compensate for lower sick leave coverage and through tax relief for lower incomes. The resulting greater number of healthy companies and income-producing, tax-paying wor-kers, along with the lower number of companies and workers in need of public assistance, could in part reduce the cost to public finances for carrying out the plan. Momentum in the construction sector, too, requires an investment of resources that need to be found if we do not wish the indispensable recovery of public finances to end up in total collapse in the absence of an economic upturn. Such a turnaround will require massive and lasting intervention, which must be guided by principles of equity, solidarity and effectiveness. Cutting waste could help a great deal, but I do not believe we can do without a substantive rethinking of pensions, pay and fiscal policy. I hope to deal with such topics in subsequent articles. | ||||||
