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New permanent contracts in Italy decrease by 77% in Q1

Staff writer ▼ | May 21, 2016
The number of new permanent contracts in Italy decreased by 77 percent in the first quarter of this year compared to the same period in 2015.
Italy worker
Europe   The Italian National Institute of Social Security:
Latest data by the Italian National Institute of Social Security (INPS) showed 428,584 open-ended contracts were stipulated from January to March, and 377,497 were terminated, according to ANSA news agency.

The result was a net rise of some 51,000 new permanent jobs. The figure marked a 77 percent drop against the 224,929 net increase in open-ended contracts registered in the Q1 2015 over 2014.

The sharp decline was mainly due to a reduction of a three-year tax break offered to employers who hire new workers on a permanent basis, INPS said in a statement.

The tax break measure had been implemented by the Italian cabinet with the budget law in 2015, bringing to a surge in the number of open-ended contracts last year, INPS added.

Such provision has been confirmed this year, but the fiscal benefits for those firms hiring permanent workers were strongly reduced.

However, fix-term contracts from January to March 2016 showed a quite stable trend compared to the previous two years, according to INPS data.

The number of temporary jobs in fact grew by 814,025 units, with a 1.7 percent decrease and a 1.1 percent decrease over 2015 and 2014, respectively. Apprenticeship contracts rose by some 50,000 units in the same period.

Overall, some 1.18 million new jobs were registered in the private sector in the Q1 2016, regardless to the type of contract, INPS said. It marked a 12.9 percent decrease compare to the first quarter of 2015.

Finally, over 31.5 million vouchers worth 10 euros (11.2 U.S. dollars) each were sold in the Q1 2016, with a 45.6 percent rise compared to the same period last year, according to the National Institute of Social Security.

The voucher system in Italy allows employees to pay occasional workers not directly in money, but with vouchers worth 10, 20, or 50 euros each.

The workers will cash their vouchers, receiving 7.5 euros for each 10-euro voucher, and the rest would cover pension contributions and job insurance.

Originally designed for seasonal agricultural workers in 2008, the voucher scheme was extended to almost all sectors of Italy's economy through the job market reform implemented in 2015.

Prime Minister Matteo Renzi's cabinet has been strongly criticized for this provision, which trade unions say is being abused by firms in order to mask regular permanent jobs, thus undermining workers' rights.

Yet, the government said a more flexible job market was necessary to tackle high unemployment levels in the country.

The national jobless rate fell to 11.4 percent in March 2016, and youth jobless rate at 36.7 percent, according to Italian Institute of Statistics (ISTAT). Both marked the lowest unemployment level in the country since end of 2012.