Introduction

The Italian labour market has been put under very strong pressure since the onset of the financial and economic crisis. In the years since 2007, the number of job-seekers has doubled and a series of long-standing critical issues, such as youth and long-term unemployment, have dramatically worsened. The Italian government initially responded to the Great Recession by maintaining previous institutional arrangements, trying to adapt them in order to cushion the social consequences of the recession. Nevertheless, after the 2011 sovereign debt crisis, the situation changed and a new wave of reforms started.

The present chapter describes these changes and assesses the direction that they have taken by comparing policies before and after the onset of the recent economic downturn. Although it is not possible to detect a single trajectory of change in Italian labour market policies, our argument is that we can observe an overall tendency towards a peculiar version of ‘welfare readjustment’ (Häusermann, 2012), a pattern of reform in which governments curtail industrial-type policy instruments, such as income or job protections for insiders, while adopting new social policies. In Italy, this ‘readjustment process’ in the domain of labour market policies has been realised through the adoption of some provisions that favour ‘outsiders’ and, at the same time, the drastic retrenchment of labour rights for workers on open-ended contracts. As a result, the boundaries between ‘insiders’ and ‘outsiders’ now appear more blurred than they were before the outbreak of the Great Recession.

The chapter is divided into four sections. The second section shows the main facets of the Italian labour market since the 1990s. The third section illustrates labour market reforms before the economic crisis. The fourth section focuses on the most recent changes since 2008. The last section offers an interpretation of labour market reforms in Italy since the crisis.

Main aspects of the Italian labour market before and since the onset of the crisis

In order to provide an overview of the Italian labour market's functioning over time, Tables 4.1 to 4.6 offer some basic information on its specificities and similarities compared with the European Union 15 countries (EU15) on average. The tables take into consideration five moments in time (1995, 2000, 2007, 2014 and 2015) in order to compare the situation before and after the onset of the crisis.