Italy: Selected Issues
IMF Staff Country Reports, July 27, 2017
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Bibliographic details
- Published: July 27, 2017
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484312568.002
Competitiveness and wage bargaining reform — core analysis
- The paper analyzes competitiveness and wage bargaining reform in Italy.
- Growth of Italian exports has lagged that of euro area peers.
- Wages are set at the sectoral level and extended nationally.
- Sectoral wage setting does not respond well to:
- firm-specific productivity,
- regional disparities,
- skill mismatches.
- Nominally rigid wages have implied adjustment through:
- lower profits,
- lower employment.
Quantified impacts and simulation results
- Moving from sectoral- to firm-level wage setting yields substantial gains of at least 3.5 percentage points.
- Reform would lead to lower unemployment (or higher employment) rate.
- Reform would produce a notable improvement in Italy’s competitiveness over the medium term.
Policy implications and recommendations (as inferred from analysis)
- Shift wage bargaining from sectoral to firm-level to better align wages with firm-specific productivity, regional conditions, and skill composition.
- Address nominal wage rigidities to reduce adjustment via profit and employment losses.
- Implement reforms that enhance export competitiveness given lagging export growth relative to euro area peers.
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