The last couple of years have seen the most significant developments and turmoil in Italian labour relations for decades.

The general principle restricting the scope of collective agreements negotiated at a national level (NLCAs) has been substantially overhauled. Moreover, since 2009 when the major Italian Union (CGIL) decided to step back and not sign some of the main NLCAs, including those applicable to the commercial and metalworking sectors, it has been a matter of great concern for HR managers in Italy that a company could no longer have a binding set of regulations applicable to the majority of its workforce.

In fact, last year the three major unions and the Employers' Association for the Metalworking Sector (Confindustria) signed a general protocol according to which shop collective agreements signed by the majority of works council members, if not all of them, are enforceable towards all employees irrespective of their union affiliation. It was also agreed that shop agreements are allowed to deviate from national ones if the latter explicitly consents to the exception or where there is a substantial economic crisis or significant investment by the Company to increase productivity.

A subsequent decree that recently became law, was then approved, confirming and expanding the above principle, by introducing the possibility for local agreements to include specific understandings aimed at increasing work and productivity.

This provision allows local collective agreements and shop agreements to deviate from statutory provisions of law and the regulations in the NLCAs on a wide variety of topics (employees' classification and duties, flexible working contracts, working time, etc.).

On November 17 2012, some of the major unions and all major employers' associations reached an historic agreement on productivity, which aims to boost shop agreements, fixes a ceiling on collective salary increases and ties a portion of them to increases in productivity. To incentivize this road map, a recent budget law was approved in Parliament granting a substantial tax discount on variable salary to those employees whose companies have implemented a shop collective agreement on productivity with the aim of increasing efficiency and production.

However, not all parties at the table have expressed their willingness to sign such an agreement and most notably CGIL has so far expressed their disapproval.

The main point under debate, which casts a long shadow over 2013, remains whether or not Italian industrial relationships will continue in the vein of recent fragmentation or whether it will return to a principle of fair confrontation and constructive cooperation in the interest of all parties involved, as well as the national economy.