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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EXPLAINED: Why people in Italy might have to carry more cash from now on

Italian retailers will no longer face fines for refusing card payments on amounts lower than €60, after the government put the brakes on a recent push towards electronic payments.

EXPLAINED: Why people in Italy might have to carry more cash from now on

Italy’s new budget bill is set to add yet another controversial chapter to the country’s long and troubled history of card payment laws.

Under Italy’s new budget law, retailers will no longer be fined for refusing card payments for smaller amounts – a controversial move that is expected to have a knock-on effect for shoppers.

READ ALSO: Key points: What Italy’s new budget law means for you 

Fines for retailers refusing card payments on amounts lower than €60 will now be suspended until at least June 2023, according to a clause included in the text of the 2023 budget law published to media on Wednesday.

As set out by the bill, the six-month suspension will allow the newly created Ministry of Enterprises and Made in Italy to “establish new exemption criteria” and “guarantee the proportionality of the given penalties”.

And, though it isn’t yet clear what new exemptions the government is currently considering nor what exactly is meant by “proportionality”, what’s certain is that residents who had started to make more purchases by card will now have to repopulate their pockets with some good old banknotes because businesses – from taxi drivers to cafes and bars – might not accept card payments for small amounts.

Fines for businesses caught refusing card payments had been introduced by Draghi’s administration back in June 2022, with retailers liable to pay “a €30 administrative fee plus four percent of the value of the transaction previously denied”, regardless of the amount owed by the customer. 

Euro banknotes in a wallet

Under Italy’s new budget law, retailers will no longer be forced to accept card payments for transactions under €60. Photo by Ina FASSBENDER / AFP

The measure angered retailers who lamented having to pay hefty bank commissions on every electronic transaction – some business owners even went as far as openly defying the law and organised themselves into a protest group (Comitato No Pos, roughly meaning ‘Anti-point-of-sale committee’). 

Given the government’s new legislation, it seems like their efforts might just have paid off. 

But, while many business owners will no doubt be happy with the suspension, others have already raised doubts about the potential ripple effects of the government’s move.

Aside from shoppers having to carry more cash than they’re currently used to, many political commentators are warning that the suspension might be a “gift to tax dodgers” in a country where, according to the latest available estimates, tax evasion costs state coffers nearly €90 billion a year.

The same was said about another of the government’s recent changes: raising the cash payment limit from 2,000 to 5,000 euros.

READ ALSO: What’s changing under Italy’s post-pandemic recovery plan? 

A previous government led by Giuseppe Conte had introduced several measures aimed at encouraging the use of electronic payments, most of which have since ended or been rolled back.

The introduction of fines for businesses refusing card payments was one of the financial objectives set out within Italy’s Recovery Plan (PNRR), which expressly refers to the fight against tax evasion as one of the country’s most urgent priorities. 

It is therefore likely that the new cabinet will at some point have to explain the latest U-turn on Recovery Plan policies in front of the EU Commission.