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Working in Italy For Members

EXPLAINED: Why doesn’t Italy have a minimum wage?

Clare Speak
Clare Speak - [email protected]
EXPLAINED: Why doesn’t Italy have a minimum wage?
Workers at a shoe factory in the central Italian Marche region. Salaries in Italy depend on collective agreements made by trade unions and there is no national minimum wage. (Photo by GABRIEL BOUYS / AFP)

After the Italian government blocked a proposal to introduce a minimum wage of nine euros per hour, we look at why the issue is so contentious and what protections workers have.

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Most countries have some sort of minimum wage in place, after the first laws on minimum legal pay were implemented in New Zealand and Australia in the 1980s.

In Italy however, there is no officially set minimum rate at which an employer can legally pay staff.

The situation doesn’t look set to change anytime soon, after the ruling coalition government blocked a proposal this week to set a national minimum wage of nine euros per hour.

Salaries in Italy are not entirely unregulated, though.

They're often agreed in negotiations between the employer and either the individual employee or a trade union which represents them (or both).

READ ALSO: Italy ranked one of the worst countries for expats to work in - again

Italy’s relatively powerful trade unions push for collective bargaining agreements, or NCBAs, which apply to different industries.

These deals usually define minimum pay for different jobs within the industry, which might differentiate between employees with different levels of experience or education.

The agreements also cover pensions, benefits and other aspects of working life. For example, a typical collective agreement can include provisions for overtime pay, sick pay, parental leave, vacation allowance, and even things like the temperatures in which you can be required to work.

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Political supporters of Italy’s current system of regulating salaries through collective bargaining describe it as “very, very advanced”.

However, the existence of these agreements is not regulated by law, and only around half of all employees in Italy are thought to be covered by an NCBA. 

This is because NCBAs only apply to employers and employees in organisations that have actually chosen to adhere to them. 

Many people working for companies not covered by an NCBA can face the prospect of receiving a low monthly salary with few benefits.

READ ALSO: Survey finds half of all Italians say salaries are too low

And such agreements do not usually cover the estimated 5.7 million workers in Italy on short-term and part-time contracts, which generally offer few protections or benefits and are often renewed repeatedly by employers in place of more secure agreements.

Italy has one of the European Union's lowest rates of wage growth, and the average Italian private sector salary stands at just over 21,800 euros per year according to the most recent available official statistics.

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Many political parties and previous governments over the years have pushed for the introduction of a minimum wage which they say would combat poverty and boost consumer spending power: the Five Star Movement even called it a "priority measure" when in government in 2019.

But so far, these proposals have not found broad enough support in a country where the issue is tied to starkly divided political ideologies.

Shortly after coming to power at the end of 2022, the current government stated its opposition to introducing a minimum wage and said that it “would be more effective to extend and strengthen the national labour contracts and reduce labour taxes.”

No concrete plans to do either of those things have since been proposed, however.

One common objection to the idea of introducing a minimum wage is that the suggested nine euros an hour seems high in relation to Italy's cost of living - though this argument seems increasingly weak today amid rising inflation.

Many also point out the high tax burden already faced by both employers and employees, and there are questions about how the minimum wage proposal would work in relation to the payment of a thirteenth salary instalment, which is common in Italy.

Although the EU in 2022 passed a new minimum wage directive to "guarantee decent living standards for workers", Italy is just one of a handful of countries that it didn’t cover.

Italy remains one of just five countries in the European Union without a minimum wage, along with Denmark, Austria, Finland, and Sweden.

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