1

WAGES AND SALARIES TRENDS IN ITALY

September the 26th, 2013 International Trade Union HouseBrussels

Dr. Lorenzo Birindelli

2

A MODEST REAL GROSS WAGES GROWTH, WITH SOME DOWNTURNS

Key concepts:• National-sectoral Collectively Agreed Wages and

salaries• Earnings (all wages items)• Inflation (CPI, Deflator)

3

Gross earnings levels in selected EU countries at constant prices. Full-time and full-year equivalent employee average in the total economy.

Private consumption expenditure deflator

20 000

22 000

24 000

26 000

28 000

30 000

32 000

34 000

36 000

38 000

40 000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

€/ye

ar a

t 201

1 pr

ice

(priv

ate

final

con

sum

ptio

n de

flato

r)

United Kingdom GermanyFrance ItalySpain

UK: 2011 average £/€ rate

SOURCE: calculations on OECD data (Dataset LFS - Average annual wages).

4

Gross earnings levels in selected OECD countries at constant prices. Average compound annual growth rates (%)

Full-time and full-year equivalent employee in the total economy.Private consumption expenditure deflator

0.0 0.5 1.0 1.5 2.0 2.5 3.0

AustraliaAustria

BelgiumCanada

DenmarkFinlandFrance

GermanyGreece

HungaryIreland

ItalyJapanKorea

LuxembourgNetherlands

NorwayPoland

PortugalSlovak Republic

Slovenia*Spain

SwedenSwitzerland

United KingdomUnited States

1993-20012002-2011

SOURCE: calculations on OECD data (Dataset: LFS - Average annual wages).

5

ITALY. National-sectoral Collectively Agreed Wages on Earnings Ratio (%)Gross values 1992-2012

93.0

91.890.9

89.490.1 90.0 89.9

89.288.4

87.086.2

85.885.4 85.7 85.6

86.285.5

86.385.5 85.8

86.2

75

80

85

90

95

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

%

National-sectoral Collectively Agreed Wages / Earnings Ratio (%)

SOURCE: calculations on ISTAT data .

6

National-sectoral Collectively Agreed Wages&Salaries Index, Earnings and Consumer Prices Index (HICP)

Yearly growth rates 1993-2014 (%)Wages and Earnings are gross and at nominal values

SOURCE: calculations on ISTAT and OECD data .

2.8

1.9

3.2

4.14.3

2.4

1.8 1.9

2.5

2.12.2

2.83.1 3.1

2.1

3.5

3.2

2.1

1.71.5 1.5

4.3

3.2

3.6

5.3

3.6

2.5

2.83.0

3.3

2.5

3.23.4 3.5

3.2

2.2

3.4

1.8

2.8

1.31.0 1.0

1.3

0.0

1.0

2.0

3.0

4.0

5.0

6.019

93

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

*

2014

*

Var.

%

National-sectoral Collectively Agreed Wages Index nominalincreases (%)Full-time Equivalent Earnings nominal increases (%)

Consumer Prices Index (HICP) increases (%)

7

The fiscal burden on labour (but also the financial base of the Italian welfare state)

Key concepts :• Tax-wedge• Social contribution on employers and employees• Personal income taxation

8

Selected EU countries. Average tax wedge (%) for a single person at 100% of average earnings with no child. Year 2001 and 2012

2001 2012Austria 46.9 48.9Belgium 56.7 56.0Denmark 43.3 38.6Finland 46.4 42.5France 50.3 50.2Germany 51.9 49.8Greece 38.2 41.9Italy 46.6 47.6Netherlands 37.4 38.6Portugal 36.4 36.7Spain 38.9 41.4Sweden 49.1 42.8United Kingdom 32.2 32.3

SOURCE: calculations on OECD data (Taxing Wages Enquiry).

9

ITALY. Comparison of standard average personal tax rates (%) for a given power purchasing parity. 2001 vs. 2013

SOURCE: author’s calculations.

2001 2013 Diff. 2013-2011

10 000€ 5.2 6.0 +0.815 000€ 13.9 14.1 +0.220 000€ 16.4 18.2 +1.725 000€ 19.8 20.5 +0.830 000€ 22.0 23.0 +0.935 000€ 24.0 25.6 +1.640 000€ 25.5 27.6 +2.045 000€ 27.0 29.1 +2.150 000€ 28.4 30.3 +2.0

10

PROGRESSING DOWNWARDS

Key concepts :• Individual income distribution• Paid and not paid time spans• Part-time

11

ITALY. Employees’ income tax returns (individuals) by taxable personal income classes at 2011 prices (%). 2001 vs. 2011 (euro per year)

00

05

10

15

20

25―

ɪ1,5

1,5–

2

2–2,

5

2,5–

3

3–3,

5

3,5–

4

4–5

5–6

6–7,

5

7,5–

10

10–1

2

12–1

5

15–2

0

20–2

6

26–2

9

29–3

5

35–4

0

40–5

0

50–5

5

55–6

0

60–7

0

70–7

5

75–8

0

80–9

0

90–1

00

100–

120

120–

150

150–

200

oltr

e 20

0

% o

f tot

al e

mpl

oyee

s' in

com

e ta

x re

turn

s

Taxable personal income classes in thousands of € at 2011 prices

2001

2011

SOURCE: calculations on Dipartimento delle Finanze (MEF Finance Department) data.

12

THE GOOD REASONS

Key concepts:• Checking unemployment• Tackling inflation• Modest (but positive) employment quantitative

trends

13

ITALY, FRANCE AND GERMANY. Unemployment rates 1990-2014 (%)

4

5

6

7

8

9

10

11

12

13

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

UNEMPLOYMENT RATE (%)

Italy

France

Germany

SOURCE: calculations on OECD data (Dataset: Economic Outlook No 93 - June 2013 ).

14

ITALY, FRANCE AND GERMANY. Yearly Inflation rates 1990-2014 (%)

-1

0

1

2

3

4

5

6

7

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

%

Private final consumption expenditure deflator annual growth (%)

ItalyFranceGermany

SOURCE: calculations on OECD data (Dataset Economic Outlook No 93 - June 2013).

15

THE NEGATIVE SPILL-OVERS (WITH OTHERS DETERMINANTS, TOO)

Key concepts:• Low productivity (both factors) track• Low growth

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Selected OECD countries. GDP, Employment and Multi-factor productivity Average compound annual growth rates 1993-2007 (%)

GDP at constant

ptices

Total employment

Multi-factor Productivity

Australia 3.8 2.2 1.0Belgium 2.2 0.8 0.7Canada 3.2 1.9 0.8Denmark 2.3 0.4 0.6Finland 3.6 1.0 2.1France 2.0 0.8 1.0Germany 1.5 0.3 1.1Ireland 7.0 3.9 2.4I taly 1.5 0.4 0.4Japan 1.1 0.0 0.8Korea 5.5 1.4 2.7Netherlands 2.8 1.4 1.0New Zealand 3.7 2.4 0.8Spain 3.2 3.1 0.2Sweden 3.0 0.4 1.5Switzerland 1.7 0.6 0.6United Kingdom 3.3 0.9 1.2United States 3.2 1.4 1.1

SOURCE: calculations on OECD data (Dataset Economic Outlook No 93 - June 2013; Productivity Database – update July 2013).

17

WHAT WE ARE FACING NOW

Key concepts:• Manufacturing decline• Erosion of the social expenditure financial (and

political) bases

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ITALY. Actual (including 2013-14 estimates) and potential Gross Domestic Product at constant prices

1 000 000

1 050 000

1 100 000

1 150 000

1 200 000

1 250 000

1 300 000

1 350 000

1 400 000

1 450 000

1 500 000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mill

ions

of €

at 2

005

pric

es

ITALY'S OUTPUT GAP

Gross Domestic Product Potential GDP

SOURCE: calculations on OECD data (Dataset Economic Outlook No 93 - June 2013).