Jobs Act: what do companies think about it?

The Jobs Act is a revolution in the Italian labour market. The introduction of the “progressive tenure employment contract” will be the leading driver of choices for companies, making permanent contracts attractive again. When the real effects of this reform will be felt in the market is hard to predict.  We could start by gauging what companies think about this reform.  Gi Group Academy – Gi Group’s foundation –

via the Labour Market Observatory (www.osservatoriolavoro.it) conducted a survey on 426 companies, focusing especially on 246 companies with over 15 employees (where the effects of the jobs act reform will have a major impact) with almost 300,000 workers in total. The main results of the survey are given below:

• Following the introduction of the new regulations, a large percentage of the companies interviewed (52.2%) will increase their use of permanent contracts (with progressive entitlement) in 2015, while there will be no changes in the use of other contract types. As many as 50% of the companies declared they will reduce, or eliminate, term contracts.
• Most of the interviewees (53.9%) think the Jobs Act will increase employment.
• Companies promote the Jobs Act, with an overall score of 6.2 points (on a 0 to 10 scale). Notably, the following aspects were rated more favourably:
  • Progressive tenure employment contract: average score 6.6
  • Outplacement contract for all unemployed people: average score 6.5
• Lastly, 64.2% of the interviewees would integrate the public outplacement voucher to allow specialised agencies to offer a quality service that is comparable to that offered with an outplacement contract to employees that were made redundant by the companies.

This data shows that, in general, the Jobs Act was promoted by companies.  In more detail, these results show that permanent contracts have become attractive again.  There seems to be a revolution in the air: companies are changing their views, towards “good” flexibility and away from contracts that keep people in a precarious situation. Not by chance 1 company out of 2, declared they will not use, or reduce the use of, term contracts.

In order to make sure that this positive evaluation of the Jobs Act was not influenced by measures other than the reform, for instance the tax relief granted with the Stability Act, Gi Group also posed some questions in the survey to 176 companies with fewer than 15 employees. This type of company is not affected by the Jobs Act, but it can exploit the tax relief like all other companies.

26% of this sample will increase permanent contracts, as against double the percentage for companies with more than 15 employees. Moreover, small companies (73.9%) think that the Jobs Act will not affect employment, while companies with over 15 employees are more optimistic (53.9%) and think that the jobs act will create more jobs.

This less “enthusiastic” result among companies with less than 15  employees, which were not affected by the Jobs Act, but which can use the tax relief, like all other companies, confirms that the positive evaluation offered by companies over 15 employees concerns the overall scheme of the Jobs Act, and it is not influenced by other  factors like economic incentives for companies that hire new employees which, although important, are of a temporary nature and therefore do not constitute a long-term strategy. 

The reform was therefore promoted, even though it still needs some more measures on the reorganisation of the existing types of contracts.  From this point of view, to continue towards flexicurity, the Government will need to move swiftly and remove the last regulatory hindrances affecting flexibility managed by staffing companies.  Another important action will be the shift from passive to active labour market policies, via the implementation of the outplacement contract and work-related services. Directly involving staffing companies in the activities allowing candidates to find another job will be another essential step, thanks to their role, their experience in the field in various territories and link with the labour market.

If these last pieces of the puzzle are put into the right places, we will really be speaking about an inclusive, modern labour market. Not a divided one, but a flexible market for companies full of medium-to-long-term opportunities for workers.  For further information on the initiative: www.osservatoriolavoro.it

Written by Gi Group Academy