This paper deals with Boeri and Garibaldi’s proposal for a new permanent employment contract in Italy, based on the French contrat nouvelles embauches model (abrogated in 2008, after ILO disapproval). They call this new contract "single", although it would abrogate none of the extant Italian contracts. It provides for an initial three-year phase wherein the worker may be fired without the benefit of judicial appeal, but indemnified instead. According to the authors, this would encourage businesses to invest in workers’ formation during the three years. Whereupon the workers’ productivity would sustain the costs of the current anti-unfair dismissal laws. This paper shows that rather than empowering unprotected workers such a reform would bring about a generalized reduction of all workers’ rights. The consequent disbalance of forces in favour of businesses would negatively impact on wages and aggregate demand, further complicating the problem of low economic growth in Italy.
Keywords: Italian Labour Market Segmentation, Reform of EPL, Single Labour Contract
Jel Code: J08, J41, J42