The Italian government approved labor measures on Workers’ Day: tax reduction, cut subsidies and more flexibility

The Italian Prime Minister, Giorgia Meloni, during a press conference at Palazzo Chigi, in Rome (REUTERS / Remo Casilli / file) (REMO CASILLI /)

In a decision loaded with symbolism, the Government of Giorgia Meloni approved this monday Workers Daya decree containing several measures of labor characteras the tax burden reduction at certain salaries, the unemployment benefit replacement known as reddito di cittadinanza (citizenship income) and the extension of the possibility of extending the temporary contract.

“I feel proud that the Government has decided to celebrate May Day with deeds and not with words and I believe that we owed new support to an economy that, although at a time of difficulty, is giving us great satisfaction,” Meloni said in a video.

The prime minister, who leads the right-wing coalition who has governed the country since World War II, chose not to illustrate the measure in a press conference, after the unions will qualify as “offensive act of arrogance” the decision to approve the decree on the workers’ holiday.

May Day is a day especially felt by Italy, a country that in its Constitution is defined as “a democratic Republic founded on work”.

100 euros per month more

People work on pressing machine parts at the IDRA group plant in Travagliato, northern Italy, January 25, 2023. (REUTERS/Alessandro Garofalo)
People work on pressing machine parts at the IDRA group plant in Travagliato, northern Italy, January 25, 2023. (REUTERS/Alessandro Garofalo) (ALESSANDRO GAROFALO/)

The main measure of the decree is the reduction of the call tax wedgethat is, the difference between what the employer pays and what the worker receives as net salary, for incomes of up to 35,000 euros per year.

Specifically, for income of up to 25,000 euros per year, the cut will be 4%, and will be added to the 3% cut already in force in 2022, which means on average about 96 euros more per month in the wage bill. For income of up to 35,000 euros, the additional cut will also be 4 percent, which will be added to the previous 2 percent, for an average of 99 euro per month. The measure is expected to cost a total of 4.1 billion euros.

The measure will take effect only for the remainder of the year, a term that the unions see as “insufficient.”

Nevertheless, Meloni stated “proud” of the measure, mining the Minister of Economy, Giancarlo Giorgettiexplained that these provisions represent “real help against the increase in the cost of life and a concrete response to chatter”.

Changes in unemployment benefits

The decree also decided to replace the citizenship income (reddito di cittadinanza), unemployment benefits program approved by the Five Star Movement in the last legislature.

The government claims that this subsidy scheme is very expensive, costing close to 8 billion euros last year, and ensured that it discourages people able to work, especially young people, to look for a job. Its supporters say it provides significant aid to millions of low-income households, particularly in the poorest regions of the South. According to the Italian Social Security, citizen income benefited four million people last year, with average subsidies of 550 euros per month.

Meloni announced that it will replace this subsidy from 2024 with a “Inclusion Check”. Unlike the citizenship income, the new subsidy is only intended for households in which there are people over 60, minors or disabled, and provided they have income below a certain threshold.

Citizenship income had been the flagship measure of the first government of Giuseppe Conte, made up of a coalition between the Five Star Movement and the League (REUTERS / Guglielmo Mangiapane)
Citizenship income had been the flagship measure of the first government of Giuseppe Conte, made up of a coalition between the Five Star Movement and the League (REUTERS / Guglielmo Mangiapane) (GUGLIELMO MANGIAPANE /)

To better understand how it will work, we will have to wait for the definitive publication of the decree, but according to the drafts that have circulated in recent days, the amount of the check will be one maximum of 500 euro per month, plus a contribution of up to 280 euros in the case of a rented home.

The check will be paid for 18 months, then there will be a one-month break, followed by another 12 months of renewal.

If there is a home person between 18 and 59 years considered “employable”you must start a job search through an employment center. If you reject an offer with a contract of at least one month, lose the check for the entire family unit (with certain conditions on the type of contract that can be offered and the distance from work to home).

Temporary contract

The decree also intervenes on the temporary contractchanging what had been decided in the so-called ‘dignity decree’ approved in 2018 by the Government of Giuseppe Conte.

That decree had reduced the possibilities of extending the temporary contract after the first 12 months.

A delivery girl in front of the Colosseum in Rome (REUTERS/Yara Nardi)
A delivery girl in front of the Colosseum in Rome (REUTERS/Yara Nardi) (YARA NARDI/)

Now the Meloni government introduced some new exceptions, extending the possibility of extending them from 12 to 24 months. The details of how it will do so, however, are still unclear.

In addition, there are a number of tax reductions to those who offer permanent contractsalso extended to employers who stabilize the temporary ones.

Another incentive in the second half of this year is for the recruitment of young people under 30 years of age that neither study nor work, that in Italy there are around 3 million in the age range between 15 and 34 years.

Opposition criticism

The three main unions in the country, who were received by Meloni yesterday to learn about the content of the reform, have already warned that “the government’s measures are not going in the requested direction.”

UIL leader, Pierpaolo Bombardieri, He regretted that “the answers are wrong given the excessive precariousness and little security” of the Italian labor market and, although he accepted the cut in the tax wedge, he criticized that it is only temporary.

The opposition did not spare criticism of the decree either.

“The decree that is approved today is a true sentence condemning precariousness,” he said. Elly Schleinopposition leader Democratic party (center left).

“They are dismantling the only means of income support for the poorest, suppressing it, trying to reduce the resources on poverty and also the duration. It was not perfect but it could be improved, the government wants to plant ideological flags in the eyes of the most fragile groups”, he said.

Elly Schlein, general secretary of the Democratic Party (REUTERS/Remo Casilli)
Elly Schlein, Secretary General of the Democratic Party (REUTERS/Remo Casilli) (REMO CASILLI/)

Giuseppe Conteformer prime minister and leader of the Five Star Party, called for an anti-government demonstration in June.

“Today, May 1st, the government meets to introduce the precariousness dl and hit the workers: this is unacceptable,” he said. “We are beyond conservative politics, beyond the rudest catering. The citizenship income is dismantled, the holy war is waged to criminalize the poor, as if poverty were a fault that cannot be forgiven”.

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