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No minimum wage for Italy as EU reaches living standards deal

EU negotiators reached a deal on minimum wages across the bloc on Monday, but Italy still hasn't adopted any minimum wage law.

No minimum wage for Italy as EU reaches living standards deal
A worker prepares bouquets of Mimosa flowers in Seborga, northwestern Italy. No minimum wage has yet been agreed for workers in Italy. (Photo by MARCO BERTORELLO / AFP)

Italy is just one of a handful of countries not covered in a new EU minimum wage directive to “guarantee decent living standards for workers”.

The European Parliament approved the deal overnight on Monday “to set adequate minimum wages”, which will apply to EU workers who have an employment contract.

European Commission President Ursula von der Leyen welcomed the agreement on Tuesday, stating that the rules “will protect the dignity of work and make sure that work pays”.

Italy’s Minister of Foreign Affairs, Luigi Di Maio, described the deal as a “historic EU agreement” in a Facebook post, adding that Italy must follow suit.

Di Maio has been pushing for a minimum wage in Italy for several years, calling it a “priority measure” back in 2019.

READ ALSO: Cost of living: How does Italy compare to the rest of the world in 2022?

“Now the minimum wage must become a reality in Italy, where millions of Italians still receive wages below €9 per hour. We need a dignified law for those workers who carry the country forward,” he wrote in his latest post on the subject.

He nodded to the populist Italian political party ‘Movimento 5 Stelle’ (M5S), who have been “supporting it for a long time and is fighting for it in parliament”.

The Minister of Agricultural Policies also wrote in a Facebook post: “This country needs a minimum wage, which must be approved in this legislature.”

He referred to the “scandalous” Organisation for Economic Cooperation and Development (OECD) data, revealing how Italy’s salaries are at the bottom of the European table.

SURVEY: Foreign residents rank Italy one of ‘worst countries in world’ for finances and working abroad

“The 5 Star Movement has been asking for (the minimum wage) for nine years now, an appeal that has gone unheeded by almost all the other political forces, which over the years have obstructed this fundamental reform of civilisation,” he added.

The prevalence of part-time and short-term contracts continue to impact Italy’s economy. (Photo by ALBERTO PIZZOLI / AFP)

For now, it will be up to the Italian government to introduce a minimum wage, as EU leaders have indicated that they will not enforce the rule – as the law doesn’t oblige member states to introduce a minimum wage.

“We will not impose a minimum wage on Italy, that is not the point,” said EU Labour Commissioner Nicolas Schmit at a press conference.

“I am highly confident that the Italian government and the social partners will reach a good agreement to strengthen collective bargaining, especially for the less well protected, and, in the end, they will come to the conclusion that it could be important to introduce a minimum-wage system in Italy.

“But it is down to the Italian government and the social partners to do it,” he added.

Italy is one of six countries, including Austria, Cyprus, Denmark, Finland and Sweden, that doesn’t have a minimum wage law in place.

Wage levels are instead determined through collective bargaining, which should not be “penalised”, according to the Minister of Economic Development Gancarlo Girgetti.

“We have very, very advanced second-level bargaining and therefore in some way this instrument must not penalise forms that we have successfully experimented with,” he stated.

Findings have showed that Italy’s salaries have continued to decline, with the country recording the biggest wage drop in the EU at the end of last year, following the effects of the pandemic.

The data revealed Italy’s large number of workers on part-time and short-term contracts, which continues to impact Italy’s economy.

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MONEY

EXPLAINED: What is Italy doing to cut the rising cost of living?

Amid soaring inflation and price rises, the Italian government has announced new measures to help families and businesses keep costs down. Here's what you need to know.

EXPLAINED: What is Italy doing to cut the rising cost of living?

Italy approved a much-anticipated aid decree on Thursday, August 4th, bringing a new round of state funding intended to tackle the country’s most critical issues: from the rising cost of living and sky-high inflation to the energy and supply crisis. 

READ ALSO: Fuel tax cut and help with energy bills: Italy approves inflation aid package

The ‘aiuti bis’ aid package, worth around 17 billion euros ($17.4 billion), likely marks the last major act by outgoing prime minister Mario Draghi before an early general election next month.

The funding is seen as badly needed after inflation hit 8 percent in Italy in June – the most severe spike the country has experienced since 1976.

After weeks of speculation about exactly which measures may or may not be included in the decree, we now know it contains everything from an extension to the fuel duty cut to more help with energy bills for those on lower incomes.

Here’s what you need to know about the latest measures intended to keep the cost of living under control.

Extension to fuel duty cut 

The current discount on fuel duties is to be extended again to September 20th, though the value of the discount will drop from 30 to 25 cents. 

The discount was recently extended to August 21st but the government decided to further prolong the incentive in a bid to ease the blow that record fuel prices have dealt to consumers and businesses.

The cut was initially introduced as far back as March when the average prices at the pump for petrol and diesel both exceeded the two-euro mark.

Help with energy bills

Measures introduced in the first half of the year to help lower-income households and vulnerable people pay rising energy bills will be extended under the new decree.

It extends an existing government discount on gas and electricity bills for a further three months, until the end of 2022, as well as reducing system charges.

READ ALSO:

Italy’s tax on the ‘excess profits’ of energy companies has meanwhile been extended to June 2023 after the government reportedly received fewer payments than expected.

Tax cut for employees

Workers earning a gross income of under €35,000 are eligible for a two percent tax saving, amounting to a small monthly ‘pay rise’ until the end of this year.

“Already in the budget law we reduced social contributions by 0.8 percent; for the second half of the year this reduction goes up to 2 percent, as we’re now adding 1.2 percent”, said Economy Minister Daniele Franco at a press conference on Thursday.

As the tax relief lasts until the end of the calendar year for a six-month period, the July deduction will be retroactive.

New aid measures announced on Thursday are hoped to boost Italy’s consumer spending power as the cost of everyday goods rises. Photo by ANDREAS SOLARO / AFP

Those earning €35,000 can expect to save around a further €30 per month (1.2 percent of a monthly salary of €2,692 – most Italian salaries are paid out over 13 rather than 12 months to give employees a tredicesima Christmas bonus).

To find out how this may apply to you, it’s advisable to speak to an accountant or your local Italian tax agency (Agenzie delle entrate) office.

More funding for mental health treatment

The new decree will also enhance the existing ‘psychologist bonus’ (bonus psicologo) by allocating an additional 15 million euros to the measure. This will bring the total amount of funds available for the bonus to 25 million euros. 

The bonus was officially introduced at the end of July to help make mental health services more affordable, amid a pandemic-induced crisis in Italy.

All individuals with an Isee (a calculation of relative household income and wealth) lower than 50,000 euros will be eligible to receive a 600-euro voucher, which they’ll be able to use when seeing professionals listed on Italy’s official register of psychologists.

See more information about claiming the bonus in a separate article here.

Discount on public transport tickets

The government will allocate a total of 101 million euros to funding its ‘transport bonus’ (bonus trasporti); 22 million more than the original amount.

The bonus takes the form of a one-time 60-euro discount to be used on the purchase of monthly or yearly tickets for local transport services.

It will be available from September 2022 to all pensioners, students, and employees with an Isee of up to 35,000 euros.

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