Italy scraps employment voucher system

The Eurointelligence think-tank said the end of the easy-to-use vouchers showed the impossibility of reforming hidebound Italy. (Reuters)

ROME: Italy has abolished voucher payments for workers, which were highly popular with employers, to avoid a bruising referendum championed by the country’s main union, Prime Minister Paolo Gentiloni said on Friday.
Payment by vouchers was introduced in 2008 as an experiment for seasonal farm laborers. The flexible and unregulated form of payment was aimed at encouraging bosses to stop hiring workers on an illegal, ad hoc basis.
Its use has spread rapidly across many sectors, with 1.7 million people — about 8 percent of all working Italians — receiving some or all payment in vouchers in 2015, angering the CGIL union, which has promoted a referendum on the issue that was due to be held on May 28.
The ruling center-left Democratic Party lost a referendum in December on constitutional reform, forcing the resignation of then-Prime Minister Matteo Renzi, and the government is anxious to avoid another bruising ballot-box battle.
“We have done this in the knowledge that Italy does not need an election campaign on themes such as this in the months ahead,” Gentiloni told reporters, announcing his Cabinet’s decision to scrap the vouchers immediately.
The CGIL hailed the move as a “great success” but employers and center-right political parties denounced the elimination of the vouchers, saying it would push parts of the economy back into the shadows and complicate legal job creation.
Under the voucher system, workers are not paid directly in money but with certificates, which the employer buys online, or at a post office or tobacconist, for €10 ($11), 20 euros or 50 euros each.
Workers then cash their vouchers in and receive €7.5 for each €10 of face value, with €2.5 going to the state to cover insurance and pension contributions.
Without an employment contract, workers have no rights in areas such as sick pay, holidays or leave, while there are obvious advantages and savings for employers. Unions said bosses were also abusing the system, paying only some wages in vouchers and the rest in cash.
The government said it would work with unions on drawing up a replacement system.
The Eurointelligence think-tank said the end of the easy-to-use vouchers showed the impossibility of reforming hidebound Italy, which has regularly underperformed other euro zone economies since the launch of the single currency in 1999.