Tuesday, June 9, 2009
The Italian Economy: Day 7
First: We learned about the Italian equivalent of the minimum wage, the gabbie salariali. Essentially, instead of one federally mandated wage (along with some states that legislate over top), they have a "wage chart" that crosses years of experience and education level. So picture a 5x5 chart for each industry with wages in each box. You find the spot for a BA with 5-10 years of experience (assuming those are your qualifications) for the industry in which you work and that is your minimum wage.
It's an interesting idea, more virtuous than a unified wage in my opinion. It also comes from the "same work, same wage" doctrine implemented here in the 1960s. In its current form, it functions as the absolute wage definition in the (backward) South, which has a lower cost of living, and sets benchmarks for the North which are exceeded.
Second: The Partita Iva Army. Essentially, Italian labor laws make it "easy to hire, difficult to fire." It's also costly to have employees, due to the hundreds of state programs that must be paid into on a per-worker basis. Many Italian citizens, in the struggle to find jobs, essentially create their own contracting firms. These citizens are then hired on short-term contracts by companies in Italy... this helps the companies keep their costs down and escape a lot of the labor regulation.
I have to run now but that's a very interesting phenomenon, predicted by mainstream economics, and I plan on exploring it further in the future. Ciao!
Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant. ~Fredrich Hayek in The Constitution of Liberty