Introduction

This chapter examines the wages of non-standard workers. It seeks to determine whether non-standard workers receive better pay than standard ones as compensation for their greater employment discontinuity (see Chapter 4). As we will see, the answer to this question is indubitably ‘no’: non-standard workers – in particular, apprentices and wage and salary independent contractors – have access to contracts with lower average gross pay as compared to standard workers, even after controlling for worker and job characteristics. In addition, further differentials emerge once the benefits paid by the employers are taken into account. In fact, contractual gross pay is only a part of a worker's overall remuneration, which includes additional components set by law, thus producing different treatments according to the type of contract. These additional components consist primarily in forms of deferred payment, such as the end-of-service allowance. Social security contributions add further ‘value’ to the pay packet, in that they provide insurance coverage in the event of sickness or unemployment and guarantee pension rights. These contributions are paid partly by the worker and partly by the employer. The portion charged to the worker is included in the gross wage, while that charged to the firm is added to the gross wage to determine the overall labour cost. For what concerns independent contractors, these additional components are in some cases entirely absent; in other cases, they are present but to a somewhat limited extent. We quantify these differences in order to provide an overall assessment of the wage differentials between standard and non-standard jobs.

Our findings are in line with other studies on the wage gap of non-standard workers in Italy, and confirm the international evidence on wage discrimination of non-standard workers: for instance, the European Commission estimates a substantial 14% wage penalty for fixed-term contracts relative to open-ended ones, after controlling for a number of variables (European Commission, 2011). By focusing on one single country, and fully exploiting a rich administrative micro-dataset (see Appendix A to this volume), we are able to differentiate this picture by the specific form of contractual arrangement. We show that non-standard contracts are heterogeneous with respect to the various compensation schemes (social contributions and end-of-service allowance) and the wage level offered, as they are for what concerns transitions (Chapter 4) and access to social protection (Chapter 6).