- PD, Five Stars, and Azione came out again with the introduction of a national minimum salary per hour.
- Public opinion is perfectly split and every side brings different strong arguments.
- However, neighbors’ experiences and studies lead to an incredible conclusion.
“Italian salaries have been blocked for 30 years”; “It’s since 2013 we purpose a minimum wage” and then “Salaries are the most worrying issue in Italian politics”. You would think that’s a typical discussion between workers or retired in a bar while playing cards and drinking spirits. These words have been pronounced by three of the most important politicians (Enrico Letta, Giuseppe Conte, and Carlo Calenda”). Centre, center-left coalition, and Five Star Movement have all mentioned the introduction of minimum wage in Italy (the purposed quota is 9€/hour) and made it the main passage in their economic purposes, even if the polls-leading center-right coalition opposes it.
In labor law, the minimum wage is the lower pay per hour that an entrepreneur ought to his employees. Many claims it’s a measure you can apply with a wave of a magic wand and it’s something that makes everyone happy. It can anyway have a point: the typical Keynesian position, backed also by 2001 Nobel Prize George Akerlof, supports the idea that there’s a proportional growth between salaries and productivity. According to Akerlof, workers feel to be treated better so they change their approach toward their jobs, a phenomenon the same economist called the “gift exchange”. Employees become addicted to their position, so staff turnover is no more suitable, even if short-term hirings are usually more convenient through fiscal reliefs. Ideally, as workers earn more, they would expend much more, enforcing the circular economy system.
However, traditional economics purists oppose the minimum wage application, enlisting the several side effects it could bring. First of all, businesses would struggle, as, to maintain the budget, employers would be forced to reduce manpower and invest more in digitalization or increase selling prices, generating a new inflation wave that would counteract the ideal cash growth. Also, economic freedom would be affected by this purpose: several small businesses wouldn’t afford so high wages and they would have to choose between shutdown, selling, or delocalization. In every case, the ultimate effect could be the monopolization of the market, as only big corporations would have the possibility to pay more without tragic losses.
Focusing on reality, Italy doesn’t have any universal minimum wage, like a few other countries such as Sweden, Finland, Denmark, and Austria and all data suggest that Italy is the only EU nation in which salaries don’t grow. The main model is collective bargaining: labor unions deal with producing categories and industrialists and fix together a sectorial minimum wage with specific rights and duties for every sector. Moreover, in Italy, the tax wedge reaches 46% (in practice, workers earn half of the total labor costs from the owners, and workers still have to pay their contributions). However, the EU Parliament publicized a few days ago a directive about the introduction of minimum earnings, but as a directive, it’s a sort of suggested guideline, whose goal was the alignment of salaries with living costs.
In Europe, different situations have certain similarities to Italy, but they have had different consequences. In Germany, the minimum wage (8.50€/hour) was introduced in 2016: at the beginning, traditional economists suggested it would have created mass unemployment, while in reality 1,5 million jobs were created in the first year and in June the Bundestag increased the MW by 12€ per hour. However, in Greece, the 2011 minimum wage (circa 900€/month, low for western Europe standards, but proportionate to Greek living costs) didn’t help in the crisis, as businesses cut the total working hours, so the total income sharply fell, even if the government approved the reduction of the minimum limit. Both countries share common points with Italy: Germany is a “transforming” economy, with a high tax wedge (49%) and had a strong unions role in contracting, which lost its power after the approval of the measure, while Greece has like Italy a skyrocketing debt, high unemployment levels, disastrous government spendings and low competitivity inside and outside national borders, but definitively both have different mechanisms, and it means it would be incorrect to transpose these models on the Italian one.
The previous examples demonstrate how we can catch some purpose from each model, but it wouldn’t fit perfectly in Italian society, also because in the same field of economics, researchers haven’t yet agreed on a joint position. In the future, I think a minimum pay could be settled in Italy but, as both Confindustria and labor unions say, it may have success only if we cut the tax wedge: this measure could mean directly lower taxes, and indirectly more budget for salaries and a boost for regularized well-paid work. Luckily, all parties noticed tax wedge is too high for a nation that has to stimulate an economical rebirth.
https://twitter.com/carlocalenda/status/1468546412895997953
https://www.washingtonpost.com/blogs/wonkblog/files/2013/10/fair_wage_effort_hypothesis.pdf
https://data.oecd.org/tax/tax-wedge.htm
https://osservatoriocoesionesociale.eu/osservatorio/il-salario-minimo-lezioni-straniere
https://www.treccani.it/enciclopedia/piigs/
Front page photo by Gazzetta del Mezzogiorno (Far-Left movement Potere al Popolo protesting in favor of an universal minimum wage)
The Bear Street Journal. 
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