Sector level institutions as a source of flexibility and security: A comparative analysis between Italy, Denmark, and the UK

The first research question set out by the present comparative analysis (see Chapter 2) aims to observe the extent of cross-country variation in the way in which collective bargaining and social dialogue activities engage with issues of flexibility and security in the chemical and pharmaceutical sector. The countries under focus are Italy, Denmark, and the UK.

RQ1a To what extent and how do sector level collective bargaining and social dialogue address issues of flexibility and security in different countries?

In order to answer this question, propositions 1 and 2 (see Chapter 3) will be examined: 1. The institutional configuration of the chemical and pharmaceutical sector accounts for

the scope of the sector level social partners’ agenda over issues of flexibility and security (Marginson and Galetto, 2015); collective bargaining and social dialogue represent functional mechanisms for the social partners to develop similar understandings around these issues and enhance the possibility for exchange of ideas, package deals, and joint problem solving between the parties (Ibsen and Mailand, 2011). Informal social dialogue arrangements, as found in the UK, provide a less procedurally secure mechanism than the formal collective bargaining institutions that are found in Italy and Denmark.

2. In countries in which labour law is more developed collective bargaining and social dialogue engage less with flexibility and more with security, since the law reduces the scope for some forms of contract-based flexibility – in particular external flexibility.

In contrast, where social welfare is more developed collective bargaining and social dialogue engage less with security and more with flexibility, because the security dimension is already covered by the state (Esping-Andersen, 1990; Ibsen and Mailand, 2011).

In light of the above propositions it is expected, first, that issues of flexibility and security will figure on the social partners’ agenda in all the three countries under focus. Nonetheless, they are likely to feature more prominently in the presence of formal sector level bargaining arrangements, such as in Italy and Denmark, than in the UK where only informal social dialogue is in place. Second, it is expected that issues of security will feature more strongly on the Italian sector level bargaining agenda, and issues of flexibility will feature more strongly on the Danish one.

7.4.1 Italy, Denmark, and the UK – Proposition 1

Chapter 6 established that the lack of sector level bargaining institutions in the UK chemical and pharmaceutical sector accounts for the ineffectiveness of social partners in addressing the issues that are relevant for this study. Although experiencing high demands for both flexibility and security, the predominantly informal approach to social dialogue in this sector has been demonstrated to hinder the capability of the social partners’ to put forward a shared agenda. The fact that informal social dialogue exists, and that under the more institutionalised framework of European social dialogue the main employers’ organisation and trade unions regularly meet, has allowed social partners to set in place a constructive relationship. In turn, this relationship has enabled them to actively collaborate over issues of common concern – such as health and safety, energy, and environmental issues. Even so, in contrast to their Italian and Danish counterparts, they have never agreed on a substantive agenda concerning flexibility and security. Hence, the first conclusion that can be drown by examining proposition 1 is that informal social dialogue in the UK does not act as functional equivalent to formal collective bargaining.

The rest of this section will therefore consist of a comparative analysis of the findings presented in Chapter 4 on Italy (see table 4.3) and Chapter 5 on Denmark (see table 5.3). Table 7.4 summarises the outcomes of collective agreements in these two countries and involves each of the seven flexibility and security categories identified within the literature

on flexicurity (Ibsen and Mailand, 2011; Marginson and Galetto, 2015). In addition, the table indicates whether the provisions address flexibility, and if so which form; security, and if so which form; or both flexibility and security, as well indicating which forms.

Table 7.4: Outcomes of collective agreements on flexibility and security in Italy and Denmark

Flexibility Security Flex & Sec

Pay Wage DK Income IT

Training Employment (DK 2004) Functional & Job (IT 1998 –

2002 – 2006 – 2012)

Functional & Employment (IT 1998 – 2006 – 2012) (DK 1998 – 2007 – 2012)

Functional & Income (DK 2007 – 2012) External & Employment (IT

1998)

Functional & Combination (DK 2007 – 2012) Job

Classifications

Functional & Income (IT 1998 – 2009 – 2012 ) Functional & Job (IT 1998 – 2002 – 2009 – 2012)

Functional & Employment (IT 2012)

Working-time Working-time (IT

2002) Working-Time (DK 1998 – 2000)

Working-time & Combination (IT 1998 – 2002) (DK 1998) Provisions for Atypical workers Job (IT 2002) Social Benefits and Entitlements Income (IT 1998 – 2002) (DK 1998 – 2000 – 2004 – 2007 – 2010 – 2012) Combination (IT 1998 – 2002) (DK 1998 – 2000 – 2004 – 2007 – 2010 – 2012) Employment (DK 2004) Employment

Working-time & Combination (DK 2010 – 2012) Measures for employment Employment (DK 2010) (DK 2010 – 2012) Combination (DK 2010 – 2012)

External & Employment (IT 2012)

Functional & Employment (DK 2010)

This table shows that both in Italy and Denmark collective agreements engage with different forms of flexibility and security. This is consistent with proposition 1 suggesting that the institutional configuration of the chemical and pharmaceutical sector exerts pressure on social partners to prioritise these issues in their bargaining agendas. Chapter 4 confirmed that, in Italy, interconfederal agreements provide sector level actors with a series of institutional resources enabling negotiations on items that are particularly functional for the sector. It is thanks to their constant interaction that the sector level actors have developed shared understandings around issues of flexibility and security which, in turn, became items of

collective bargaining. Similarly, Chapter 5 showed that, in Denmark, the institutional framework within which sector level social partners operate enables them to address flexibility and security directly. Given the key role that collective bargaining exerts within the ‘Danish flexicurity’ system, social partners enhance flexibility both in the internal and external labour market and improve the degree of security through continuous in-job training and education. As a result of their joint efforts in achieving this, similar understandings around flexibility and security have emerged. Hence, the fact that chemicals and pharmaceuticals come under the wider industry agreement in DK does not appear to have mitigated the extent to which flexibility and security feature on the bargaining agenda and in the consequent agreements.

7.4.2 Italy and Denmark – Proposition 2

Table 7.4 shows that not only does collective bargaining engage with flexibility and security, both in Italy and Denmark, but also that negotiations lead to a variety of flexibility and security trade-offs. However, whether agreements address one form of flexibility and/or one form of security varies across the seven substantive categories. Thus, in order to tackle proposition 2, the next paragraphs explores each of the seven categories in detail.

1. Pay: In Italy the category of pay only addresses income security, while in Denmark it only addresses wage flexibility. This outcome reflects national institutional differences. The Danish flexicurity system is based on the principle that income levels are sustained through active social policies while sector level collective bargaining protects minimum-wage levels. This mechanism allows companies to adapt remuneration strategies according to their local resources. By contrast, in Italy, income security is achieved through a centralised system of wage setting and by enhancing job security through legal constraints.

2. Training: In Denmark the category of training enables job transferability in the external labour market, thereby enhancing employment security. This is due to the fact that the Danish labour market is characterised by high levels of flexibility fostered through light regulation on individual dismissal and generous unemployment benefits. In addition, both in Italyand in Denmark, training fosters trade-offs between functional flexibility and employment security. However, two factors reduce the effect of training policies on employment security in Italy. First, laws have operated to reduce external mobility. As a result, training measures do not

play the same strategic role as in Denmark in terms of creating job opportunities for outsiders. On the contrary, in Italy training measures increase internal mobility, leading primarily to trade-offs between functional flexibility and job security. Secondly, the investment in active labour policies made by sector level social partners in these two countries is based on a substantially different approach: in Denmark the sector funds in-job and vocational training directly; in Italy training policies are enacted by allowing companies to match their training needs with the resources available locally. As the burden of employee up-skilling and re-skilling is to a large extent on the shoulders of single employers – and only marginally sustained by public resources – training policies in Italy are more likely to enhance internal forms of flexibility and job security. However, as Chapter 4 revealed, given the high level of flexibility required by the chemical and pharmaceutical industry – high intense in technologies and organised on a continuous process basis – sector level social partners have used apprenticeship programmes as a means to gain some sort of external flexibility in exchange for in-job and education for employees. In doing so, they produced a trade-off between external flexibility and employment security. Finally, in Denmark, the category of training also leads to a variety of trade-offs between functional flexibility and income security and functional flexibility and combination security. This data further corroborates proposition 2 suggesting that the national framework within which the Danish sector level social partners interact provides them with more institutional resources than their Italian counterparts. In particular, through the direct administration of training funds bargaining actors have increased the variety of items they can rely upon towards the negotiations of flexibility and security trade-offs. It follows that, when engaging with issues of flexibility and security sector level social partners in Denmark have more autonomy and the scope of their bargaining agendas is more extensive than their counterparts in Italy. 3. Job classifications: this category is only an object of sector level collective bargaining in Italy, reflecting the choice of social partners not to give up on centralised wage bargaining. A rigid principle of classifying employees according to their education, responsibilities, and seniority has been pursued in Italy, as a way of protecting the income levels of employees. However, in Italy chemicals and pharmaceuticals have experienced higher demands for functional flexibility in comparison to other industries. Therefore, sector level collective bargaining has progressively adapted its classification scheme to the increasing need for a multi-skilled and multi-functional workforce. Negotiations on job classifications have been instrumental to the enhancement of both dimensions of functional flexibility and income

security as well as functional flexibility and job security. Furthermore, in 2012 the job classification scheme was reformed in an attempt to transfer the effects of in-job training and education to the external labour market, thereby improving both functional flexibility and employment security. Yet, because of the weak link that exists in Italy between training measures and employment security, and because of the reduced scope for external flexibility in the labour market, the job classifications reform is still more likely to address job security than it is employment security. In Denmark, this category is not an object of sector level collective bargaining at all, simply because sector level bargaining is only entitled to set minimum wage levels, while pay bargaining occurs primarily at the company level.

4. Working-time: given the nature of chemicals and pharmaceuticals’ production processes, in Italy and Denmark alike, social partners have relied heavily on working-time as one of the most functional means to deliver high productivity levels. Thus, the scope of sector level bargaining on working-time traditionally has been very extensive. However, one of the most distinguishing responsibilities of trade unions in this particular sector is the role they play in monitoring the potential implications of working-time flexibility on workers’ health and safety and work-life balance. Interviews with social partners in both countries confirm the direct involvement of those at the sector level in making sure that productivity targets (working-time flexibility) are not met at the expense of employees’ well-being (combination security). Therefore, in contrast to a previous study conducted on the manufacturing sector (Ibsen and Mailand, 2011), the present research does not refrain from linking the category of working-time to trade-offs between working-time flexibility and combination security. 5. Provisions for atypical workers: this category in Denmark is not a target of sector level bargaining because the level of external flexibility is extensive enough to encourage standard forms of employment. In contrast, in Italy, provisions for atypical workers have entered collective bargaining agendas as a result of delegating mechanisms included in the law liberalising temporary contracts. This legislation enhances external flexibility in the labour market, while sector level bargaining provides job security by setting restrictions on the use and quotas for temporary workers.

6. Social benefits and entitlements: the analysis of the agreements suggests that negotiations on the category of social benefits and entitlements address primarily the dimension of security, in particular, income and combination security, both in Italy and in Denmark, and