Italy looks to discourage short-term contracts

Italian lawmakers have passed legislation that seeks to limit short-term contracts.

Under the new “dignity decree”, temporary contracts can only be renewed to a maximum of two years – down from three years, previously.

It is hoped that the new law will help to alleviate employment issues in the country, where unemployment is currently hovering around 11%.

Young workers have particularly struggled, as employers have chosen to use temporary work contracts, rather than create permanent positions. It has been reported that in the last year alone, permanent roles decreased by 83,000. Almost 400,000 temporary contracts were created in that same period.

To encourage firms to employ workers on longer-term arrangements, the government will also decrease labour taxes on workers under the age of 35. These tax cuts apply for the first three years of the worker’s employment with a company, and will be capped at €3,000 (S$4,700) per year.

The “dignity decree” also includes measures to keep employers from leaving Italy after taking advantage of government funding.

Companies move out of Italy within five years of accepting tax cuts or other state support must pay back the initial sum – plus an additional penalty that could be up to twice the initial sum.