The Dignity Decree: Halting Delocalization

Author:Mr Calogero Boccadutri
Profession:Boccadutri International Law Firm
 
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Recently approved Dignity Decree will place limitations on the relocation of companies whilst aiming to simplify taxation.

As of the eleventh of August, The Decree of Dignity was passed, the first legislative act to be enacted by the new Italian populist government. The official order takes its name from the need to make urgent provisions for the dignity of workers and businesses in Italy. Several objectives of the decree aim to combat job stability, relocation of enterprises and economic dependency on delocalized production.

Overturning the previous Democratic party's Job Act, the new populist Italian government has advanced the coined "Dignity Decree" which establishes the maximum length for temporary employment contracts.

The length of these contracts will be converted from 36 months to 24, with the maximum number of renewals decreasing from 5 to 4. The opportunity to extend temporary contracts will only be permissible under certain circumstances, and in the absence of a formal contract renewal (at 12 months of employment), the contract will be understood as terminated. The risks associated with increased rigidity of the labour market outweigh the benefits of higher labour productivity, the government argues.

The goal is that the decree will be effective in creating incentives for employers to convert temporary contracts into permanent ones. However, sceptics argue that the decree will only serve to spike turnover in the temporary work market and not reduce overall temporary contracts.

Stop relocation!

Delocalization is understood as the transfer of activities, capital and employment to areas of the country or world that provide competitive incentives. In essence, it is the act of separating fabrication from consumption. This has been done by multiple companies to reduce production and labour costs while reaping increased financial gain.

However with the decree in place, penalties will incur if sufficient reason for the transfer of production is not presented. If found to have moved production to other parts of Italy or the EU without justification, the return of the capital plus 5% interest penalty will incur.

If production was moved outside of the EU without sufficient...

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