Labour market policy in Italy’s recovery and resilience plan. Same old or a new departure?

Abstract

ABSTRACT Liberalizing labour market reforms have topped the agenda of structural reforms implemented in Italy over the last two decades, with detrimental effects on employment quality, wage dynamics and productivity. In 2021, Italy’s then Prime Minister, Mario Draghi, promised that the investments outlined in Italy’s National Recovery and Resilience Plan (NRRP) would ‘transform Italy’s labour market’. How and to what extent does the labour market policy agenda enshrined in Italy’s NRRP deviate from the prior trajectory of policy change? What balance of economic, political and class interests does it reflect? And to what extent does it adequately tackle the long-standing challenges of Italy’s labour market? This article addresses these questions combining in-depth analysis of the labour market policy measures in Italy’s 2021 NRRP and interviews with experts and elites involved in the policy process. Contrary to claims of discontinuity, the findings highlight substantive continuity of the NRRP labour market policy agenda with the prior trajectory of liberalization. The Plan maintains a narrow focus on supply-side labour market interventions – primarily the strengthening of active labour market policies (ALMPs) – without re-regulatory interventions to tackle labour market insecurity or wage stagnation. Exogenous conditionality and domestic political dynamics that systematically advanced the preferences of employer organizations in the design of the NRRP account for the limited extent of policy change. Due to the neglect of demand-side labour market interventions and the uncertainties surrounding the implementation of the ALMP reforms, the transformatory potential of the NRRP’s labour market agenda is likely to remain limited.