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Vittorio De Luca and Elena Cannone
A new post-crisis wind is beginning to blow: Italy is recovering its competitiveness and recouping its appeal on the global stage.
Philip Morris International Inc, Volkswagen and Audi are just some of the multinationals which have decided to invest in Italy.
The new trend is backed up further by the results of two separate studies carried out by leading economic research centres.
These are (i) the annual report from the Imd Business School of Lausanne, which used a survey of six thousand top managers worldwide to draw up a table of the 61 most economically competitive countries in the world, and (ii) the Foreign Direct Investment Confidence Index compiled by management consultants A.T. Kearney based on a poll of companies in all sectors of industry from 27 different countries.
According to the Imd report, Italy gained eight points in the competitiveness rankings in 2015, its best result in five years.
Following a modest revival in 2014, Italy rose from 20th to 12th place in the Foreign Direct Investment Confidence Index in 2015, ranking it above Switzerland and The Netherlands – countries with a considerably easier tax and banking regime than Italy – in Europe, with only the UK, France and Germany ahead of it.
One factor which has brought Italy back into foreign investors’ sights is certainly the Renzi Government’s employment reforms, known as the Jobs Act. The aim behind the Italian Government’s policy is to help boost employment and overhaul both the country’s labour market and its social security system.
Reforms to employment rights have helped introduce greater flexibility to the labour market, combined with greater certainty over the termination of employment contracts, bringing the Italian system closer into line with its European counterparts.
The introduction of permanent contracts with progressive entitlements now gives employers greater flexibility as regards outgoing staff, as well as simplifying the consequences of unjustified dismissals with greater transparency over the related costs, involving the offer of mediation during which employees are invited to accept a settlement, thus preventing lawsuits and all the uncertainties involved.
The new legislation – which replaces Article 18 of Law n. 300 of 20th May 1970 (the “Workers’ Statute”) – is based on a system of “progressive entitlements”, under which the reinstatement of an employee to their post becomes the exception to be applied in a minority of cases. The Jobs Act makes protecting employee indemnity the norm, introducing precise indemnity criteria to remove any uncertainties. This should also be read in conjunction with Law 190 of 23rd December 2014 (the 2015 “Stability Law”) which has reduced labour costs in part by granting 3-years’-worth of social security incentives to employers who take on new staff.
Added to this is the reform of two key provisions under Italian legislation, the first regarding changing employee roles (Article 2013 of the Italian Civil Code) and the second concerning equipment and devices used to remotely monitor staff (Article 4 of Law n. 300 of 20th May 1970).
During a press conference held on 3rd March 2015 at the Geneva Motor Show, FIAT Chrysler Automobiles CEO Sergio Marchionne said that the Jobs Act “is a law which provides foreign investors with certainty.”
The President and CEO of General Electric Italia Sandro De Poli expressed a similar opinion on the Jobs Act during a meeting at the Italian Ministry of Foreign Affairs on 15th July 2015. Chaired by the Italian Minister for Foreign Affairs and International Cooperation, Paolo Gentiloni, and the Minister of Labour and Social Policies, Giuliano Poletti, this meeting was attended by diplomatic envoys from G20 Member States.
According to Mr De Poli, “Italy is obviously becoming more attractive for permanent investments which will boost industry, and the Government reforms are moving in the right direction as regards encouraging foreign investors. The Jobs Act in particular makes Italy more competitive than other comparable countries which have passed reforms in recent years, and it helps reinforce the country’s many strengths, from excellence in technology to the standards of our universities.”
On the subject of the new employment reforms, De Luca & Partners is carrying out a fact-finding survey involving managers from Italian and international companies (http://www.delucapartners.it/survey-jobs-act/) as part of its partnership with Invest in Lombardy. The results of the survey will be discussed during a round table on “The impact of the Jobs Act on foreign companies in Italy” to be held in Milan on 15th October 2015.