JPRS ID: 10693 WEST EUROPE REPORT

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• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000500080067-5
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• Document Page Count: 103
• Document Creation Date: November 1, 2016
• Sequence Number: 67
• Content Type: REPORTS

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JPRS L/ 10693
28 July 1982 .
West E u ro e Re~o rt
p ~
" CFOUO 46/82)
FBI$ FOREIGN BROADLAST INFORMATION SERVICE
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JPRS L/10693
28 July 1982
~
WEST EUROPE REPORT
~ (FOUO 46/82)
CONTENTS
THEATER NUCLEAR FORCES
FEDERAL REPUBLIC OF GERMANY
Ape~, on NATO Strategy, Nonfirst Jse of Nuclear Arms
(Hans Apel; 10 Jun 82) 1
ECONOMIC
I ITALY
Failure of Systems Against Tax Evasion
(Giorgio Cadoria, Roberto Ippolito; IL MONDO,
1 Jun 82) .........e .......................oo....... 6
i
I Economists~ Report on State of Economy
(Paola De B enedetti, et al; IL MONDO,
1 Jun 82) 16
Problem of Absenteeism, Mobility in Industry Discussed
(CORRIERE DELIA SERA, 6 May 82) ...........o.....o.. 27
Absenteeism, Mobility Decrease
Reemployment "Fiasco' in Piedmon~, by Giuseppe
~ d'Adda and Renzo Ruf~ielli
'Prensentism' Beaomes a Problem
' Wage Supplement Sanctions Advocated, by Sergio
Pininfarina
Productivity as Bargaining Counter, by Giuseppe
~ Medusa
Productivity in Wage Barg~ining, by Giuseppe
Medusa
- a - [III - WE - 150 FOUO]
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POLITICAL
FEDERAL REPUBLIC OF ~ERMANY '
B randt on SPD/FDP Coalition Prospects, SPD Future
(Willy B randt Inter~iew; 3TERN, 1 Jul 82) 38
GREECE
Prospects for Papandreou Era Surveyed in Detail
(S~ephen Milligan; THE ECONO~IIST, 3-9 Jul 82) 42
ITALY
Outcome of League of Cooperatives Cangress
(Vittorio B orelli, et aI; ?L MONDO, 8 Jun 82) 58
SPAIN
Defections from UCD Expected as Center Will Not Hold
(Antxon Sarasqueta; CA1~I0, 7 JuM $2) 68
National El~ctions Would Confirm Results in Andalucia
(Joae Manual A rija; CAI~BIO, 7 Jun 82) 75
Pilar B ravo Explains Resignat~.on from PCE
(Pilar Bravo; CAIMBIO, 28 Jun 82) 78
~ Sentences Seen as Having Unsettled Some in Military
(CAMBIO, 28 Jun 82) 80
Center Parties To Lose Independence in Wake of Polarization
(Antxon Sarasqueta; CA1~I0, 28 Jun 82) 84
MI LI TARY
FRANCE
Official Questions Hernu on Aircraft Carriera, Nuclear
Submarine$
(AIR ET COSMOS, 29 May 82) 92
Xingu Aircraft Delivered from B razil
(AIR ET COSMOS, 29 May 82) .......................o, 94
GENERAL
FRANCE
Arianespace Announces Revised Launch Calen%ar, 6 in 1983
(Pierre Langereux; AIR ET COSMOS, 29 May 82)........... 96
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THEATER FORCES FEDERAL REPUBLIC OF GERMANY
APEL ON NATO STRATEGY, NONFIRST USE OF NUCLEAR ARMS
Bonn EUROPA-ARCHIV in German 10 Jun 82 pp 353-356
[Article by Dr Hans Apel, FRG Minister of Defense: "The NATO Strategy
Discussion--Comments on the Article 'Nuclear Arms and the Atlantic
Alliance"'1)
' [Text] The debate about the validity of the NATO strategy is starting up
again. I am not sorry about that--on the contrary. This is the only way
in which we can clarif y the basis of our security policy in a critical
dialogue and, if necessary, modify it. This debate must place the conditions
for securing the peace i.n Europe within the f,ramework of a global point of
view. We are dependent upon the export of our manufactured goods. It
provides us with ~obs and prosperity. We are thoroughly dependent upon
the import of energy and raw materials. Together, the two result in world-
wide economic dependencies which make it incumbent upon us to take diplomatic
and development policy initiatives. They are of course also a part of our
~ overall security policy. The issue here must not be to drag the East-West
conflict into the Third World. Rather, unrestricted recognition of all
~ peoples' rights of self-determination must remain the basis of our policies.
There is an increasing danger that conflicts within the Third World cou.ld
have an indirect impact on European peace and security through concomitant
economic effects, as well as direct impact through the spread of military
tensions. Preservation of peace and limitation of conflict worldwide
therafore constitute decisive tasks for our policies outside of Europe as
well. Population explosion, raw materials and energy shortages, progressive
miiitarization in many Third World countries--all that confronts us with
new challenges. But we can successfully contribute to the solution of these
problems only if we can secure peace in Europe. While our continent and
~ peaca policy for Europe cannot serve as a model for worldwide peacekeeping,
Editor's Note: Ti~?e article by McGeorge Bundy, George F. Kennan, Robert S.
McNamara and Gerard Smith was published simultaneously in the ~ournals FOREIGN
AFFAIRS (Spring 1982) and EUROPA-ARCHIV (No 7/1982). A detailed critique by
a group of German authors (Karl Kaiser, Geo~g Leber, Alois Mertes and Franz-
~ Joseph Schulze) will be published~under the title "Nuclear Arms and the
Maintenance of ?eace" in No 12 of EUROPA-ARCHIV (25 June 1982) ar.:.
simultaneously in FORLIGN AFFAIRS (Summer 1982).
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the principles of renouncing violence, establishing trust and arms control are
applicable everywhere. But an exacerbation of tensions between East and
� Wcst in Europe would necessarily have grave consequences, be it only because
- we would then have to use greater resources fo~ defense which would otherwise
be available for tasks benefiting the Third World. Maintenance of peace and
detente in Europe are therefore at t~e same time also important contributions
- to paace worldwide. Our security policy must be baseu on those facts. The
implementation of securing the peace in Europe Zeads of necessity to the
qeustion of nuclear deterrence: I am fully convinced that the existence of
nuclear ar~s hab been primarily responsible for preventing acts of war in
Europe since 1945. The unpredictability of the progress of armed conflict,
once it has started, an~i the consequent unacceptable risks for all partici-
_ pants have prevented clashes of arms even on those occasions which could
have been solved militarily under "prenuclear" conditi.on~. Devastating wars
have broken out in Europe's history for much less weighty reasons than the
construction of the Berlin Wall or the suppression of the "Prague Spring."
This points up the problematic nature of nuclear arms: they have, until now,
preserved peace in Europe. Should ~ieterrence fail t~owever, the use of auclear
arms could spell the end of humanit;?. Even the most recent statement by the
German Evangelical Church di~ not come up with a solution for this dilemma
~
and therefore it envisions a"reprieve" during which the preservation of peac~
by way of nuclear deterrence can still be ~ustified. It has, in addition,
endorsed a central element of our security policy: that preservation of .
peace on the basis of military balance increasingly requires mutual trust in
all areas, incZuding arms limitation. To attain the latter, especially in
_ nuclear arms, mt~st be our ob~ective.
On the other hand, we should not labor under the illusion that the atom can
be banished from our lives. Even if all r_uclear arms in East and West were
to be verifiably destroyed, the knowledge of their manufacture and effects
would persist. Humanity will never return to the state of its prenuclear
"innocence." We must learn tc preserve peace despite this. A nuclear war
could be the end of humanity--~ust as certainly, a large-scale conventional
war in Europe could signify the end of our civilizatiot?. That is why our
strategy must in any case remain one of prevention of war. Not even the
first shot must be fired.
From that standpoint we must give critical consideration to the.article
"Nuclear Arms and the Atlantic Alliance" by McGeorge Bundy, ~eorge Kennan,
Robert McNamara and Gerard Smith coucerning the question of renouncing first
use of nuclear weapons. The article was published simultaneously in the
journals FOREIGN AFFAIRS and EUROPA-AitCHIV. I am in completE agreement with
several points:
-~-It is uncertain at best whether a limitation of nuclear warfare would
succeed in the manner necessary to control and end the conflict. That is so
because Soviet strategy includes the use of nuclear arms as an integral
component of possible military operations.
--It is correct also that the de~ate about the NATO dual-track decision has
long since acquired a character which goes beyond its purely military
~ significance. The quality of the implementation of its two parts will prove
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whether or not NATO, if confror~ted with an unequivocal Soviet challenge, will
have the strength to take those measures for preserving the military balance
which it considers appropriate. Apart from questions of military strategy,
each of which is of great significance, this question especially addresses
the integrity of the alliance.
--I further share the opinion that only our conventional defense capability
and it continuous improvement lends credibility to our strategy of deterrence.
Our conventional f orces must under no circumstances be permitted to lose their
effectiveness, thus lowering the nuclear threshold.
That has of course some concomitant consequences. The authors hint ~t them.
Even the 3 percent annual increase in ac~ual national defense expenditures to
which we agreed in 1979 and which progressively fewer NATO partners attain in
view of their economic and social problems, will not be sufficient. A
considerable manpower increase in NATO f orces in Europe would be imperative.
Are our allies ready for this? Can our country commit itself to it? Can
the neogtiations about the limitation of forces and arms in Europ~ and the
proposed conference on disarmament in Europe result in greater conventional
equilibrium at a lower level of armament? These questions remain unanswered.
Nevertheless the four authors state that a positive reply on their part
' would have to be a condition for even thinki.ng about renunciation of the
first use of the nuclear arm~ option.
Another consideration appears of importance to me: even if the West were
ceremoniously and officially to renounce any first use of its n~~clear weapons
~n Europe, if in addition it were to conclude an appropriate treaty on this
with the USSR and if it were, as a precondition for this, to make its
conventional force equal to that of the Warsaw Pact, nuclear arms would still
remain in the arsenal of the USSR and the Warsaw Pact. Even a nuclear-free
- zone in Europe would not eliminate the threat in view of the range of t'~e
SS-20s. Therefore, both sides wnuld have to maintain nuclear arsenals
covering the entire military sp~ctrum as a potential for a survivable second
strike and to modernize them as required. Only agreements for the qualitative
and quantitative limitation of the respective potentials, which are verifiable
at any time, could reduce the mutual massive distrust to such an extent that
an actual and meanir~gful reduction of systems could be feasible. We Germans
should in addition urge the alliance that the number and kind of nuclear
warheads in Europe be verified, wich the ob~ective of reducing them
significantly. I:ATO is presently reconsiderin~ this matter.
Any use of a nuclear warhead has the additional effect of crossing the
threshold between conventional and nuclear warfare. It becomes thus evident
that the orders to use nuclear weapons of any kind, including tactical ones,
must always be issued from Washington and thus shift the risk to their point
of origin. The Soviets have always understood it that way. They never gave
any consideration to a nucleas "disengagement" by the United States, which
is feared by many Europeans, as far as their own military strategic situation
is concerned. This would of course change, if NATO were to renounce, in a
, binding and convincing manner, any first use of its nuclear forces. The
assumption made in the above cited article that "an effective policy o~
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renouncing fir~t use would also reduce the threat of a conventional attack
in Europe (EUROPA-ARCHIV 7/1982, p 195), is therefore astonishing, especially
sir.~e this statement is made in the section dealing with military reasons for
renouncing first use. The statement is not adequately substantiated.
Political reasons could perhaps explain this statement. The question must
of course be permitted whether we may still maintain our defense strategy of
credible deterrence even if it would threaten the loss of the political
cohesion of the alliance. And it is true of course that the cahesion of the
- alliance and the basic consensus of the people as well as their defense
readiness are of much greater importance to preserving peace than any NATO
strate;y. But then this is true also for every single member country of the
alliance. NATO is an alliance of sovereign states with an indissoluble share
of the cost and the risk. Obviously, the strategic situation of treaty
members varies as a function of their geographic location. Even France and
Great Britain--nuclear powers, as well--are in a better situation than we are.
The presence of their troops on our soil changes this situation only to the
extent that it directly involves them in any case of aggression. This is
even more true for the United States. Obviously, it is directly involved in
the defense of Europe through the presence of its troops. But our cour~try
would be the battlefield.
For us, a meaningful defense strategy must be oriented toward the avoidance
of conventional armed conf lict in Central Europe. Anything else would not
constitute a fair distribution of risks as provided by the alliance--risks
which are unavoidable if there is to be successful deterrence and avoidance
of war. Anyone ~onsidering "no first use" must realize that he is advancing
the cause of regionalizing armed confrontation in Europe and that he is
perm itting the approach of a separation of the United States from Europe.
And this situation would not even change fundamentally if it were possible to
Pstablish a conventional military balance in Europe.
The strategy of NATO is first and foremost a strategy of avoiding war. It
is therefore a strategy of "no first use" of any arms at all. Our strategy
of a flexihle response is not a doctriae of nuclear first use either. True,
it does not exclude first use of nuclear arms as a means of deterrence. But
it primarily provides for a defense with those arms w~th which the alliance
is attacked--even against superior conventional forces. This specifically
exclud~s the substitution of lacking conventional forces with nuclear means.
Thus the alliance must under no circumstances neglect its conventional forces.
- We must be able in the future to arrest a possible conventional aggression by
means of a conventional forward area defense.
For us the decisive present and future factor remains that we must continue
our policy of detente despite criticism at home and setbacks in our relations
with the East. We hope that this will result, among other things, in an
approximate military balance at the lowest possible level. The FRG must
remain the driving force for a realistic European security policy. Our
country would be particularly vulnerable to the consequences of the wrong
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security policy. For this reason, an animated debate about the prerequisites
for securing the peace in Europe is mandatory. This includes NATO strategy
as well. To me, there is no question that we must look out for our own
interests, apart from the solidarity of the alliance and despite all the
good neighbor policy toward East Europe.
GOPYRIGHT: 1982 Verlag fuer Internationale Politik GmbH, Bonn
~ 9273
CSO: 3103/527
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ECOt'O~:IC ITAI.Y
FAILURE OF SY3TEMS AGAINST TAX EVASION
Milan IL MONDO in Italian 1 Jun 82 pp ~2-17
[Article by Criorgio Cadoria and Roberto Ippolito~ "Tax E~raders, Inc"]
[Text] Cash registerst avdita at the be,nks= handcuffa
for those xho do not pay. There are ma~y proposals for
combating t,ax fraud, but they are imresiably blocked.
Why? Who is "shelving" them?
Conservative eatima~es by the Ministry of Finance indicate that ona Italian in
' 10 d~es not file a declaration of personal incon?e. A survey ba.sed on a sample
of 600~000 tax~yers~ hoKever~ has discloaed that 20 percent of all taxpayers
are tax evadera. In the eame conservative vein~ it is admitted at the ~ninie-
try that evasions of the NA [value--added tax~ amount to 6 or 7 trillion lire
per year. In an interviex granted to IL MONDO in August 1981--2 monthe a,~ter
relinquishing direction of the miniatry--Franco Reviglio declared that the
tota.l of taxes evaded can be calculated at around 28 trillion lire. The
situa.tion has in fact not improved since then--despite an increaee in the
yield of Revenue Service audits--for these results are atill small by compari-
son rrith estimates Which irndicate that the total of taxes evaded has already
broken through the "ceiling" of 30 trillion lire.
To 3udge by their xords, hoxever, the government and the political pe,rtiee--
ma3ority ard opposition alike--have made the fight againat tax evasion a main
plar?k in their'respective platfbrme and programs. It has amounted to a slogan
that has been reiterated for years xithout any sLbstantial change in the
situation. Hox can this be? Is the fight against tax evasion hopeleas? Who
is opposing ii.? What, specifically~ ia thxarting it? IL MONDO has analyzed
the factors that have frustrated every attempt to compel t,hose xho do not pay
their taxes to pay thsm, and reconstructs etep by atep the xays in xhich the
tax evader is enabled to go merrily on his xay.
The boycotting of the individual initiativee occuris~ of course, in a context
of problems of a more general nature. "To improve the level of compliance
xith the tax la,tiro," former Minister of Finance Filippo Maria Pandolfi told IL
MONDO, "lai+s and administrative actions are naeded that ase persuasive and
tough. In order for perauaaion to be effective the taxpdyer muet be able to
function in an atmoephere oi certai~y and thsrelors of truet. Thia meana
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that people should not have to believe they are the only ones xho p~s,y their
taxes. The regulationa should be coherent ani etables the rules of the game
should be enduring. Governmental discontinuity, for example, is har~'ul.
- I've been a member of the cabinet for 5 years but ministex of finance for leas
than 2 years: it xould have been better if I had held the same post for n~y
entire tenure in the cabinet."
Today, hos~ever, not only has the individual citizen's faith in the internal.
revenue system been shaken but certain actions can in fact even be cor.strued
as an invitation to tax evasion. "For months," says Carlo V12zini, assistant
secretary of the Social Democratic Party, "there have been rumors that an
amnesty was posaible. As they wait to see xhat xill happen, those xho have
been successful in not paying their taxes are accordingly reaorting to litiga-
~ifln in the hope that they Kill never have to pay. The question as to whether
the amnesty should or should not be granted must therefore be resolved."
~ Handcuffe for Tax L~aders
This is the name given to the bill xhich~ if approved by the parliament, xill
make it possible to arrest tax evaders. At the p~esent time~ thanks to the
regulation prescribing the so-ca.lled "pre-~udicial tax procedure~" the courts
can institute a crimina,l action ozLly after a definitive audit hse baen ~erde
by the financial offices: another dozen years could pass before this occurs.
In other words, the citizen xho defraude the internal revenue system knoxs
t~iere is every likelihood that he xill not xind up in prison. On 13 March
peviglio introduced a bill to eliminate the p~e-~udicial grocedure, but after
the bill had been alloxed to repose in a desk draxar of the finanea committee
of the fliamber of Deputies it subsequently becaane tha canter of violent debate
and remains a"dead letter." "Opposition to the bill is very strong on the
part of the DC [ Q~ristian Dem~cratic P~rty~, Khich is attempting to emasculate
it," said Communist Deputy Giuseppe D'Alema,. There is constant Krangling in
committee over the text of the bill.
"It is essential to make a distinction betxeen culp~ble conduct and f.raudulent
conduct, and to sllow criminal prosecution only in the case of fraudulent
conduct," said Q~ristian Democr~.tic entrepreneur Luigi Rosai di Montelera.
His fellow pa,rty member, Mario Usellini~ also an entrepreneur~ xent so far as
to introduce an amendment (:[n contrast to tha government's position) xhereby
the failure to issue invoicea could not constitute a crime.
D'Alema is also critical of the current minister of fina,nce, the socialist
Rino Formica. "F~ced xith the oppoaition of the DC~" he said, "the PSI
[Italian Socialist Party~ initially gave ground~ in th~.t Formica aubmitted a
new text Nhich from our point of viex was less stringent in nature, and thia
resulted in delays. He subsequently introduced nex amendments which will have
the effect of creating a loophole in any appropriate aolution to the problem."
Formica re~ects this eriticism, claiming instead that the text he had origi-
na.lly proposed was an attempt to reconcile the varioua formulas xhich had
surfaced in the initial phase of the deb~te. Within the committee, hoxever~
there was no dearth of moves to prpvent the arrest of the tax evadere. to
- redimension the penalties~ and ta make the courts aub~ect to the decialona of
the tax offices.
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Some of the reservations made ase quite explicit. "Nothing is more sacra-
sanc;,," r~~zini declared, "than the principle of 'handcuffs for the tax
evaders.' 'i'he nex regulations~ howeve~:, come into conflict xith rea:lity: I
xorry about xhat a magistrate could do using the new lax aa a weapon." Mea,n~
while, the dispute over the amendmants enablee the tax evader to remain e~t
libert;~.
Ba,nking Sacrecy
The ob3ective was to bring Ita.ly into line xit,h the other Western countries
(except for Switzerland, which ie virtually the only country that regarde
credit institutions a8 absolutely imio].able). Tha lagisla*ion Kould have
- been marde substantially.similar to that currently in effect in th~ United
5tates. In rnactice, provision was made in certain restricted cas~a to allow
violation of banking secrecy in the interest of the fight against tax evaaion
(and also against those kinds of cr~'_:ne xhich are incr~asingly concealed behind
bold entrerneneurial venture~). The ministerial decree conceived by Formica~
hoKever, appears to be irremediably buried. Prime Miniater Giovanni Spadolini~
a renublica,n, initially supporiad the decree b+at_aubsequently blocked it by
requesting the opinion of the o~her ministAxs~ xhereuFon Minisi;er of the Treas-
ury P'ino Andreatta~ a Christian Democrat, adopted the criticisms of Silvio
Golzio~ president of the Banking Association, xho had advised a resounding
rejection of the idea of granting diacretionaxy porrers over the internal audit-
ing function of the ba.nks t Minister of the Budget Giorgio La Ma,lfa~ a repub-
lican~ expressed uncerta.inty with regaxd to groaedural matters; and Minister
of Justice Clelio Darida, a Christian Democrat~ opposad giving the revenue
service access to professiona.l offices on gr~ur~ds that professiona.l confiden-
~ tiality should not be sacrificed "to the need for ensuring equity and open-
ness in tax matters"(4lmila,r id~as had already been expreased by the Bax
_ Association).
There are even doubts amo:~g the social democrats. "I do not believe," Vizzini
= 3eclaxed, "that it is proper to al.?ow the administration to violate ba.nking
- confidentiality even wh~n it is s. party in a legal proceeding currently in
progress= onl~r the courts should have the power to do so." Tha "land mine" in
the path of the decree was laid there by the Christian Democrat Ciusep~
Azzaro~ former und.ersecretary of finance, and by Usellini. Azzaro (who pre-
sented the committee report on the decree to parliament) has never concealed
tiis own reservations. Usellini~ for hia part,~devised the strategem that ha.s
obstructed the parliamentary Frocess~ that is to say, the reque~t that a con-
sensus be reached among the ministers before a study s~f the measure was und~r-
taken by the parliamentary Committee of the Thirty. The ensuing ~egative
opinion rendered by the ministers served to make paseage of the legislation
virtually impossible. Formica will now attempt to obtain a elarification of
the viewpoint of the ma~ority~ but his only support s~ far has com~ from the
ranks of the opposition. "The decree~" D'Alema. says~ "is a positive measure,
because tax evasion has found the banks to be a"safe harbor" for avoiding
audits. I hope the f~risti~n Democrata will rethink th~ir positidn, at least
in consideration of the imperatives of the fight againat organized crime."
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- Ca,sh RegiGters
It was 2 yeaxs ago next 16 July that Revigl.io introduced the bill providing
for the installation--in business establishments--of equipment that xill make
it nossible for the internal revenue system to audlt grnss receiptsi speci~l
cash re~isters would make it possible to issue sales receipts ~`~hat xould also
be valuable for tax purposes. These 2 years have seen absolutely n~ ffovement
in this direction, however. No one on the finance committee of the Chaanber
of Deputies has yet come forwa.rd to push for a stu~y of the bill or to move
for its inclusion on the agdnda. Government and opposition alike found them-
selves in agreement that there xould be no further discusaion of the bill.
?~las it laziness.? I~or organization of the Kork o~ the parliameait? Or Kas it
obstructionism which--by concentrating attention on a single bill--manages to
impede the norma.l activity of the chamber? These are all possible reasons.
It is an iror~y of fate that the peaceful slumt.er of the bill Kas interrupted
by the committee on only one occasion~ Khen a request xas ma,de that the
measure he studied in legislative session~ that is to say~ kithout the need
for a vote being taken on the floor. The corresponding authorization was
given~ for atudying a bill in legi.slative aeesion should in fact speed up its
approva'.: but in these past 3 months there ha.s been no action on the bill.
Litigation
For years there has been talk of rei�orming the system for handling appeale.
It Kould constitute an a,dditional weapon for use against tax evadera--one that
could be brought in~o play more rapidly and effectively. Concrete proposals
to accomplish this purpose are hard to find~ however. Reviglio had proposed a
complete revision of the system but left the governmant before he xas able to
complete the dra.ft of the bill he had in mind. Seve~~al bills were introduced
in the chamber and the sena,te~ prima.rily by social democrats and liberals and
subsequently by individual deputies. These do not yet constitute the baeis
for an in-depth comparative study, hoxever.
Ewery year~ as a result, hundreds of thousands of tax evasion casea are added
to trte millions of unresolved cases. "It's also a problem of decentraliza-
tion," says Undersecretaxy of Fina,nce Francesco Colucci (a socialist)~ "that
must be dealt xith decisively. The bill for restructuration of the financial
administration provides (and certainly not by chance) for the creation of
regiona.l internal revenue offices. These offices xould be en:poxered to fknc-
, tion autonomously vis-a-vis the central administration--unlike the exiating
departments, xhich do not decide on a great many queation~s Ar.zi instead merely
"pass the buck."
The tax evaders (Rnd those who help them to take refuge in the ramifications
of administrative inefficiency) find it easy to profit from this situation.
After a certain number of yeaxr~ the audit reports are outlaxed by the statute
of ].imitations and the correspo~ding files xind up in the shredd~er--and xith
them not anly any po~sibility for Internal Revenue to recovar trillions of
lire but ~lso ar~y :possibility of fina,lly uncovering the foci of tax avasion.
This means that basically Internal Revenue muat in every instance begin
again--f~om scratch--an unequal fight against profiteers xho are increasingly
battle-hasdened and increasingly protected.
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Table 1. The Mounta.in of Tax Evasion (,in milliona of lire)
+ a~ 30.000.000
ze.ooo.ooo ~
T6.000.000
23.000,000 .
1918/79 197A/80 1980/81 19A1lAY
Table 2. Taxes EWa.ded but Recovered (As Established by the Revenue Service;
~ in millions of lire)
5'si :;c,H
v '
a
(1) ~
~
Inlrazioni all'!.,, 41 � 1
Altre tasse G.2G5
afferi ~L 1
!
~ ~ ~ 2.50~.542 ~
1 Imposte dirette 1.759.919 ~
,
:
�`�3,%;:+;;r:
t ,
_
~ 19i~u 1981
Keys ~
i. Violat!ons of the IVA 2. Other businesa taxes 3. Direct taxes
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Administration
Tl~e bill for restruct�.,ration of the financial administration xas also intro-
duced by Revi lio, but to date it has been passed. only in the senate (on 11
November 1981~, even though it ia regarded as a ~eeasure of enormous importanca.
Emilio Rubbi, a Christian Democrat, chairman of the finance committee of the
chamber~ s+ho hopes to be able at least to get it on the ag~nda this awom~ar,
declaresi "It's self-deception to consider adopting instrum~entalities ~yha.t
axe more sophisticated than those a].ready in force~ unless a~,~dits ha~e firat
, been intensified to the greatest posaible extent."
'rlhat must therefore be done? Should more pereonnel be hired? But xon't it
then be said that the economic situation does not permit all that hiring?
"It's very shortsighted~" Rubbi eaid, "because it overlooka the fact that the
money thus apent can be offdet by the awns recoversd f~c+m the tax evadere and
the improved rapport that xould be eatablished xith the taxpayers. The
problem~ hoxever~ liea rrith tha prevailing attitude in the civil service. If
diligence on the part of irdividual civil servants is not eolicited at the
highest level, there is little inclination in parliament to hire more people.
"We axe amcious," Pa.ndolfi added~ "not to lessen the motivation of the perBOn-
nel xho are necessarily the sole p^.~otagoniete in the struggle against tax
evasion." Something has in fact been done With respect to hiring~ 13~000
' new employees have been added to the ranks since the first of :he year. These
axe actually former temporary employeea~ hoxever, xho have had no training~
in practice~ they represent an additional obstacle to efficiency in tha Nork
of the otficea.
"And the offices~" D'Alema added~ "must also cooperate more effectively Kith
the revenue service. At preaent~ if they receive a memo they xill sometimes
'toss' it and sometimes make use of iti no one ever knoxe Khat its fate xill
be." This is an obstacle of no little import in the fight against tax
evasion; it is an unexpected help for those who do not pay their taxea. The
rivalry between two different official bodiea is most intense at the customs-
houaes, where the revenue service and financial offices con~ bnt each other
directly.
Colucci (xhom Formica personally aesigned to the reveriue service) speaks of
"a lack of coordination betxeen the 'yellox flamea' ar~d the financial offices~"
and of "irregularities in connection Kith the i~.ervention carried out both in
the auditing and in the evaluation of tax evasion"~ he also apeake of "policies
that axe too discretionary." The imgression~ anwng thos~ xho heard him, xas
that he xas choosing his xards carefully.
Revenue Service
Still quoting Colucci: "The revenue service ahould reviae certain of its
methods of operation xith a viex to a more rational utilization of personnel~
acting in close con3unction Kith the financial adminiatration." The role of
the revenue officers in tracking doxn tax evadars ia irdispensable and deci-
sive. For this reason as xell, stepa have been taken to bring the staff
of the aervice (~rhich has for yeare been shorthanded) up to full strength by
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recruiting 2~000 guards, 4~000 noncommissioned officers and 200 officers. The
bill to strengt~hen the service, hoxever, xas introduced by Pandolfi in late
1;~78 and cannot be acted cn until 1985--that is if averything goss xall.
Is this one more indication of prote.^.tion for -}ax ~evaders, xho regard. the
"yeYlox flames" as a redoubtable adversary even urd4r the "discretionary
policies to xhich Colucci ma,de reference? It is dif~'icult to give a dePini-
tive answer, but it is necessary to emphasize once more how far behirxi xo are
in the fight against tax evasion~ even ~n respect to routine administrative
action. ldhat are the consequences? In this case the ansxer is easy. Immersed
in a thousand tasks, burdened Nith a myriad of laxs and regulations to enforce,
the revenue officers find it increasingly difficult to operate �~ith ar~y degree
of selectivity. Qnly their dedication ard akill have enabled them to achieve
results that are at times even exceptional, considering the meana that are
available to them.
Fisca.l Receipt
Take for example the ca.se of one of the few laxs that for better or worse heve
been impl :mented during the pa.st 5 years r the la.x making the fiscal receipt
compulsory. Audits axe the exclusive responaibility ~~f the revenue service~
which cannot employ more than a certain number of inen for the purpoee. Mat~y
fines are assessed for vio]atiorie of the fiscal receipt laH~ and proposals have
already been marde for the temporary closure of business esta:blishments that
hav~ committed multiple violationsi bu~ the evasions outnumber t,he finea.
Above all, one is dealing with a type of evasion that leaves no trace: groof
must be obtained "on the spot" or nothing further can be done. At the Ministry
of Fina.nce they point out that it is like traffic viola.tions= at least a
million a day are committed, according to estimates~ but no more than 10~000
cita.tions axe ever issued in any 24-hour period..
In the case of the fiscal receipt law, the ratio of fines to violations is of
course not as lox a.s 1 percent~ but it is not a great 3ea1 more than that.
This situa.tion gives rise to still another disadvantagd~ while the fiscal
receipts make it possible to arrive at a more precise determination of a busi-
nessman's income for other tax purposes arid eapecially for the IRPEF (expan-
sion unknoxn]~e~chievement of this ob3ective is still far in the future and the
incidence of tax evasion in the mercantile sector continues to be one of the
hi~hest. At ttie ministry they are saying, disaonsolately~ "With the IVA.
[value-added taac~ being passed on to the customer, the principal effect of the
fiscal receipt to date has been an inerease in hotel and restaurant gricesi
one must continue to use it, however, beca.use there ia no easier course to
folloK."
Amon~ other things, an atmosphere of connivance is to a certain extent being
reestablished betxeen businessman and cuatomer--an atmosphere that initially
appeared to have been dispelled khen the customer wa,s cast in the role of
_ "aciversary and auditor" of the businessma.n. "Defand your interests--and
everyone's interests--so that the taxes will be paid," say the ministerial
, leaflets that accompa,r~y presentation of the fisca,l receipt. Rather than pay
_ 20,000 lire for a dinner with the NA. added~ mar~y choose to pay 15~000 lire
without the NA.
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L^opholes in the Lsws
Could the fiscal receipt also l~ecome a spectacular loopt;ale in a ewnbersome
and confused piece of legi~lation? Formica, contends that "there are already
too ma.ny badly xritten laws--laKS that go aft~r little things rather than what
is important." HiR predecessors at the Ministry of Finance--Reviglio~ Pandolfi
and Aruno Visentini h'_mself--have always arguod that it is necessary to avoid
engaging in a bogus "fiscal terrorism," i.e., proclaiming measurea that later
have basica,lly come to naught because of aa insufficiency of technicians cape-
ble of enforcing them.
It is also essentlal, hoKever~ to grevent the continuance--and consolidation--
of tax evasion precisely as a result of the gaps left open in a succession of
ina,dequate measures. Consider for exaanple the possibility of deducting expen-
di~.ures for gasoline from certain typea of income. What happens, in a great
ma.ny ca.ses? You buy a decrepit automobile for a feK 10, 000-~ire n~otes ancl
re~3.ster it under your firm na.me as a"xork-related ir3plement." The car then
sir~ply sits in the gaxage or even in the dtreet, but to ~udg~ by the tax
rf:turn f iled with the Intern~,l Revenue it is a,s if the car laga 30 ~ 000 kilo-
r~.eters per month.
?~mat about audits, and--above all--the posaibility of making th$m? As things
are today, it is useless even to talk about it. Has not Znternal Revenue
itself~.moreover, publicly admitted its oxn semi-impotence by resorting to the
notorious "tax lotteries"? These xere eupposed to serve as a aca,re ta.ctic,
but have prod.uced results so disconcerting as to suggest it xould be advisable
to drnp the Nhole idea once and for all.
These fiscal measur~s xould therefore be quite bene~i~ial--f'rom everyone's
standpoint but above all from the standpoint of Internal Revenue--if they xere
completely revised or even abolished. In the case of certain taxee arxi fees--
as for example those relating to government conceasions--the state perhaps
spends more than it collects= in the case of certain other taxes, the yi.eld
is so minimal that it does not even begin to ~ustify the enormous expenditure
of resources required for collection, especially in viek of the traditional
scarcity arr~ inadequacy of these resourees.
The prcblem is not merely one of ra.tionality but also one of image. An
internal revenue service that is impotent--or in at~y event, clumsy and always
harried--Kill never be ta.ken seriously. "The impression.prevails," says
Colucci, "that many of the xeapons of Internal Revenue are blunted, becauea--
among other things--people are certainly not corninced that they ara dealing
xith an efficiant administration."
La.ws ~ regula.tions and other measures filter down f~om the p~.tliament. or at
lea.st fYom the ministries. It is preci~el in the "filtration' ~tRge~ hoxever
(and especie411y at the parliamentary lavel~ that there is orgaa,~.zed resistance,
that pressw:~e groups are active~ arxl that corporata and partisan interests
prevail. A law~ a regulation or other meaeure are--generally speaking--initi-
ated with tlze best of intem ions but frequently xind up Weakened or debased by
- a series of compromises. The results produced ase often t,he oppoaite of xhat
was origi~lly intended.
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Fisca.l Register
~ The "fiscal register"--which Kas supposed to be the key~~t~ne of the Italian tax
- system--had a most difficult gestation period and subsequen'~ly, for so ma~y
y~~,rs, has had a mi.serable existence. It~ too, has hard ti:e misfortune to
suffer ~om a measure of publicity xhich xas disprop~rtionate to the resu3ts
that could ob3ectively be expected--at least in the initial phase. The super-
ficial enthusia,sm for "puehing a button and nailing the tax evader'� certainly
did it a disaervice. On the other hard~ tha resiatance (more vr lese organ-
ized) to ita introduction has unquestionably rendered an incredibly great
service to tax evaders~ so much so as to create the rather Kell-founded impres-
sion that the register wa.s being boycotted in an effort to ensure a delay that
could conceivably enable the tax evader~ to claim immunity from p'r.oeecution in
th e flZture .
Whether or not that is the case, i;here can be no doubt that the fiscal regis-
ter in any everrt came too late for a tax system that must inCroaeingly--and
immediately--deal xith the emergency situations attendant on the economic
crisis as xell as with the urgent need for fairn~ess in taxation. Ma~y of the
distortions of the tax system (anl of course the moat aggressively ruth].ess
"distortion" of all, tax pvasion itself) can be ascribed to this delay.
NoH~ however, the mecha.s~ism has been set in motion, and the tax register
appears at last to be assuming a subetantial role on the tax scene. The
system is already in a position to supgly a great many of the elements neces-
sary for the so-caYled "cross checka" to verify that declared income cores-
ponds to actw~,l incoma. It is nox poseible to hava audit resulte xith s .
margin of erntir of around 20 percent, xhich 3s already quite good by compe.ri-
son Kith the audita--based on inductive reasoning--that have for more than 30
years determin~ed the legality or illegality of tax returns. These cross
checks~ for their pext, can theoretically "catch up Kith" 90 percent of the
taxpayers or presumptive taxpayera. They xould deal a blow to at least a
large se~nent of the tax evaders. It xill nonetheless.take ~ long times there
are insufficient personnel~ and not all peraonnel are fully qualified. After
all, data, syateme--no ma.tter how flexible--are certainly incapable of hringing
order out of the chaos that exists among taxes, feeg, trfbunals and customa
because of the lamentable lack of coordination among the various services.
It is therefore essential that the tax register be ma.naged by a reorganized
financial administration. In the reorganization bill, for example~ txo inno-
vations axe contemplated that can no longer be postponed--namely, a single
general directorate and a single personnel directorate--xith the goal of
eliminating absurd partitions that gresently axist anang individual eervices
and even among irdividua.l offices of the same aervice.
It is therefore necessaxy to cloae an enormous gap, a.s for exa,mple in the case
of real estate, both improved and unimproved. Only in a few pilot provinces
has a start been made on recording data that refer comgrehensively to the
transactions (purcha.ses and transfers) that took place in 1981 (and in ar~y
event, none that took place any earlier than 1980). Ewen in these pilot
provinces, moreover, you have an infarma,tion void that goes back for decades
and has been aggra.vated by the chronic crisis of the real estate regi~ter.
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The increase in the mimber of IRP~F declarations (forms 740 or 101) filed b~?
Korkers and pensioners ha.s ~loxed down the atora~e of data that are essential
(especially in the case of the 101's) to the "cros6 checks." In the ~est
� n~3ority of cases~ onl;y income tZ~om securities is put into memory.
Provisional Audit Resu:lts
More years must accordingly p~ss before the tax register is f~iilly operative~
and before the fight against tax evasion can make consietent pro~e~s. In the
meantime, one must continue to rely on the goodxill of fina,ncial nw,nagers, on
the efficiency of the revenue aervice~ and on the tra~ditional poiitical acro-
batics to dig more coins out of the pockets of those ci~izena irho are alrea~y
pe,ying their taxea. There is t,~~lk--persistant talk--of revising the IVA xith
a viex to pTeserving the second~-stage tax reduction scheduled for this year=
there is always someone who will sho~ solicitude for the so-called "legalized"
tax evasion and thereby nourish the frightful government deficit. The legal-
ized tax evasion, in this insta.nce, xould relate to the BOT [exp~r~sion
unknown~ and C~D [Confederation of 3ma11 Fhrmera], which might then no longer
en3oy the privilege of the tax ~xemption.
What is certain~ mearnrhile, is that the provisional.~neasures xill continue to
be in effect. The only anti-tax evasion measure~ moreover~ is p~ecisely the
one established by presidential decree concerning the proviaionel audit
results. The decree became neceasary xhen the fiscal regiater supplied the
ini:~ial data on the 1977 cross chec.ks. Irregularities appeared in approxi-
ma~ely 600,000 cases, some of xhich xere poasible ca~sea of complete ~ax eva-
sion (by yers xho appear in the NA. or INPS files but not in thoae for
direct taxes . The financial offices do have the possibility of recovering
the ta~ oxed fairly rapidly on the basis of a provisional audit~ xithout
pre~udicing the subsequent fina? audit. It isn't much~ but for nox--unfortu-
na.tely--it's all that can be done.
OOPYRIGHTs IL MONDO 19~� ~
10992
cso: 3104/223
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~ ECONOMIC ITALY
~
~
{
I
~
- I ECONON:IS'iS' REPORT ON STATE OF ~0O110MY
Milan IL M4ND0 in Italian 1 Jun 82 pp k1-47
[Article by Paola De Benedetti, Efisio Eepa and Maurizio Valentini~ "Deval-
uation in the 19~0's I~iill Not Halp the Sy?port T~a,de"~
[Text~ Bummary of the Report
The causes of the xeakness of the lira are not merely situational but derive
in large measure from the structural problema of international trade. Our
, analysis of the re rt xill concentrate on five pointe~ 1) evolution of the
~talian economy= 2~exporta; 3) import?;= 4) proepecta; and 5) proposalB.
The decision in favor of economic integration into the European orbit and--
more genera.ll speaking--the Western orbit (Maz~ehall Plan~ cuatome union~
Common Ma.rket~ has had a profounri effect on the eomposition of Italy'B foreign
tra.de. The industrial system became specialized in the technologica.lly mature
sectors precisely because they axe free from competition from the United
States~ which dominated the Weetern econon:ies during the postxax period.
The sys�tem has also suffered from EEC protectionism, which is directed primar-
ily toWard ~rrotecting the production of commoditi~s such as grain and meat--
areas where Ita.ly is traditionally at a disadvantage. This has forced Italy
to buy on the xorld's highest-priced marketa without being able to contract
for the export of its inanufactured goods on equally favora.ble terms.
The high incidence of labor disputes, and the high labor coets~ of the 197o'B
compelled the industrial system to decentralize in an effort to increase labor
productivity. Also in relation to this proeess~ small and medium-scale Italian
producers entered the internationa,l market by specializing in varioua of the
so-called "mature" sectors--mature~ that is~ in terr~s of the meana of produc-
tion or in terms of qua.lity. Theae exports eucceeded in defeating the competi-
tion of the developed~ and t,he developing, countries by virtue of lox labor
costs. In numerous instances Italy has obtained a,n increasing share of tha
- world market: in the manufacturing sector~ Italian exporta increased--during
the 1970's--from 6.8 percent to 7.4 percent of the total exports of the other
industrialized countries.
The number one item on the debit side of the trade balance consists oY petro-
leum products. It poee� a proble~ that la indisputable and difficult to
resolve, at least in the opinion of some of the participants in the diBCUesion~
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but it is norr being ma.tched by the outflox in the chemical aector reaulting
_ from the failure of the attempt made throughout the 1970's to create an indus-
' trial pole of attraction concentrated in the South. The thtr.d 2.~rgest item on
the debit side is t:ze deficit in agricultural food productio~, xhich developed
not only because EEC policy has penalized Mediterranean agricultural produc-
tion but also because of the changea that have occurred in consumer tastea
during the past 30 years--changes that have reveale:: Italian agricultural
enterprises to be lacking in ~3aptability.
The Italian syste~ is in a state of continuing evolutionr throughout the
195~~$ a~. 1960's it met international competition successfully thanke to the
lox cost of labor and ra.K materials. In the 1970's, hoxever~ the picture
changed. completely. The model began to malt~nction as a consequence of the
rrage increases and rising energy pricee. An economic policy Kas adopted that
attempted to sustain prc,duction b;,? increasing transfer paymente to the commun-
ity and to private busineases. Theae expenditures created a deficit in the
nublic sector Khich in turn has reaulted in a contirniing ad3ustment of the
ra,te of exchange--a circumstance that for some time had the effect of revivi-
fying the industrial system.
At the outset of the 1980'S this mechanism~ t~~o, entered a crisis stage. The
nositive effects of the devaluations have bean diminishina substantially, and
the impact of the inflationary differential is xorking increaaingly to Italy's
disa.d.vantage. A structural policy muat be e~tablished, in addition to control-
ling the deficit.
In certain atrategic sectors the ma~or decisions must be made by public manage-
ment (energy, alectronics and teleaatics aectore)--decieiona xhich xill even
take the form of the organization of public demand--xhile in the "mature"
sectora industrial groductivity must be increased tlarther and be adapted to
the nex d~mensions of the market. All this, hofrever~ a~ust be subor~linated to
the necessity ior supporting technological innovation and res~earch that xill
make it possible to exp~nd the scope of technologically adv~:~ced pzroduction
- even in the mature sectors.
Analysis of the Report
Trade balances in the red~ a.s the first signs of an economic revaval appeari
foreign excti,ange reserves dangerously depleted~ eo much so ae to poee the
threat of a devaiuation of the lira in the fall. Once again the foreign
"link"--that is to say, the complex of international factora that condition
the Italian economy--is exerting its influence on economic policy. In the
coming mo~hs the monetary authoritiee xill be facing a difficult choice~ a
choice tha� is more political than technicali namely~ xhether (and hox much)
to throttle d~wn the economic revival in orber to save tha exchange rate.
3ut is there a xay to avoid the foreign "link"? Ia it poseible to modify the
structural factors that restrict economic policy to a very narrox track
betxeen succesaive devaluations and economic stagnation? These questiona xere
put to the group of economists th~:~t meets every 6 montha at the invitation of
IL MONDO to put the finishing to~aches on a report on topics of ma~or impor-
tancee Mario Baldasaarri, instructor in economice at Bolognai Innocen~o
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Cipolletta~ director of IS00 [Institute for the Study of Economic T~ends~i
Marcello De Cecco~ instructor at Siena a~d the E~ropean University of Florencei
Lucio Izzo, professor of economics at Rome; l~lario Monti, instructor in monetary
theory and policy at Ac~coni Uni.veraity in M~lant F~anco Reviglio~ professor
of the acience of financa at th~a University of Ttiirini and Luigi 3paventa~
profeseor of economics Rome gnd deputy of the ind.ependent I,eft. Because of
his specific expertise in the field of xorld trarde, Fabrizio Onid.a, professor
oP international economics at Bocconi Univeraity in Milan, Kas also irnited to
take part in the discussion. Angelo TazrtazZi, inatructor in economica at
Bologna and secretaz~r of the Prometeia res~arch center~ xas cuatomerily also
included in the group that drafted these reporta.
The Hunger for Innovation ~
The latest data concerning the balance of trade have served to confirm that as
of the erd of March the deficit had already exceeded 5 trillion lire. To pro-
_ tect the lira the Bank of Ita,ly has recently draxn down the foreign exchange
reserves, to thP extent of expending as much as several hundredg of billiona of
lire per day. This was done, moreover, at a time xhen the industrial "machine"
xas ~ust beginning to move far~rard again and tha inflationa,ry spiral ~+as sho~r-
ing some aigns of slackening. So once again the perverse train of events ia
set in motioni almost as soon as the economy has begun to move forrrard,
Italy's accounts with foreign coux�triea tond dangerously toxaxd the debit
sidP. One of the reasoi.., is that companies are rebuilding their inventories,
in the belief that an incre~:ae in domestic demand is imminent. The greater
part of the defi~it in this period--a deficit already aggravated by the
strengthened pasition of tha dollax--is caused by the increasing importation
of petroleum and raw mater~als for the manufacturing aector of industry. An
item-by-item analysis of the tracie data~ on the other hand~ shoxs a favora,ble
o~erall balance in the ca.se of it~ms other than petrolewa products. In con-
~ trast to the positive results in traditionally active sectors aucF~ as clothing,
textiles and machinery and the good performance of aectors auch as a~etalKOrk-
ing az~d transportai;ion equipment, the accounta for the chemical~ food, paper
and leather sectors are sinking into the red.
According to the participa,nts in the discussion~ the exceptional dimensions of
the deficit are also to be attributed to the international situation. Indeed~
the Ita,lian economy has actually beer. moving for~rard at a more rapid rate than
the economies of its own trarde partnersi but urxier these conditions the demand
for Italian products abroad increeuses more alo~ly than the.domeetic demand for
imported goods.
The balance of paymenta represents still another "queation mark." Here~ the
deficit for the first 3 months of this year remained at the level of f.he pre-
vious year (3.433 trillion lire in 19~ compared to 3.408 trillion in 1981)~
but the high degree of vulnerability of the Italian economy to foreign in-
fluences is a source of concern. In 1981 the scarcity of credl.t availa.ble to
domestic firms (beca.use of import deposits ard the credit crunch) induced
ma.ny Italian firms to contract indebtedness on foreign finanCial markets. This
has helped to provide "breathing spa.ce" for the balance of payments~ but has
also raised serious questions xith respect to xhat will happen irhen these debta
must be repaid.
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- -
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19
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The authors of the report~ however, indicate that the problems of foreign
trade are not exclusively of a situational nature. If ar~ything~ the oscilla-
tions of certain key variablas (exchange rate~ level of xorld demarid~ the
international situation) have accantuated the imbalances of a foreign trade
- structure that has developed over the yeaars.
1. Etirolution of the Itallan Economy
The c2ioices made by Italy in the immediate postxar period necessarily evolved
into certain specializations with respect to producta and to export maarkets
that led--in the late 195o'e--to Italy'a mea~bership first in the Customs Union
and subsequently in the Cc~mmon Market. Thie pzroduced a trerd toxasd epeciali-
zation by Italy in the "mature" eectors and ~toxasd a~a~dual deempha,eis of the
advanced sectors--a trend that xas reinforced during the years that folloxed.
The situation was further complicated, in a second phase, by the agricultural
protectionism of the E~SC~ r+hich operated in accordance xith mod,alities that
' reKarded self-sufficiency (at the level of the Community) in those products
such as grain and meat of which Italy Kas a disadvantaged producer and tradi-
tional importer. This economic integration has forced Italy to buy on the
hi~hest-priced maxkets in the World without being able to conclude contracts
enabling it to export a comparable value of manufactured gooda ur~der equally
favorable corditions.
Italy was accordingly unsuccessful (unlike Germar~y and Japan, in the same
period) in making the transition f~om the prod~action of consumsr goods to the
production of goods requiring an irnestment in advanced technology. An attempt
xas in fact made by introduce a.dvanced technology selectively into sectora
such as petrochemica.ls, nuclear engineering and electronics. Faced xith the
re::ponse of fo~eign competition~ hoKever~ ar~d becauae of the credit crunch ir~
1963-64~ even the most courageoua attempts at this type of inver~tment Kere
unsucceasful. ToHard the end of the 1960's~ the change in the relationehip
between uniona and mana,gement led Italian big anr'a middle-scale business to
react by decentralizing production--that is to sa;~ by hiring from outside the
ranks of its oxn work force. With the exception of the steel, petrochemical
' and automobile industries, this phenomenon characterized Italian industry
throughout the deca,de of the 1970's and led to sign3fica,nt changeg in the
very structure of foreign trade.
During the pa,st 12 years we have Kitnessed an increa.sing specialization by
Italy in the products of light industries that axe relatively la.bor-intensive~
~t is a phenomenon which--among the so-called developed countries--appears to
apply only to the Italian economy (see Table 2).
Ide are also xitnessing an overturn of the structure of the Italian compa.nies
that are oriented toward the export trade. Whereas these export-oriented
companies at first consisted basica,lly of a small number of large firms, there
is today a growing ~esence of those sectors in xhich small and medium-sca.le
companies predominate, accompa,nied by a return to the ~xport of "traditional"
products. The more industrialized trarde partners (that is to say, the coun-
tries of the OEQD area) are moving toward verticalization of their production
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Table 2. Ztem-~by-Item Composition of the P.ycports of I~nufactured Coods (1979)
(values in percentagea) '
n.i~a c~..m. r..~ea ~
d tli~IbiM~il'1~, vn~o ~2 ~ 8'3 ~2.~9 ~3
3 3 0 ~
abbiylla ~ 4,2 2.0 3.1 2.8 0.6
calzatur e~
j~ 8,2 0. 5 0,9 0.8 0,3
moWlio `6~ 3,3 1,5 0,7 0,7 0,2
autwetture ~71 5,8 ~
Nni fln~ll dl In~~Him~nt ~ 1,7 0.7 1.0 0.9
di cui: macchine utensill ~ 9 ) 9 g ~ 3,8 5.9 6,1
macchlne epr~ole e t s i
~ l ~ 1 2,6
macChine sbttr~hs 1 3. 4 5, 0 4.2 3.3 4,7
macchi e uff~io ~ 1,8 2. ~ 2.8 4,4 6,5
s.n~ noe rin.~~~i~ 12 ~p~~ ~ atA rt.+ ~.Z
Fonte EIaM+~ar~nne der~ (kse ~ 1~ ~
KBy: ~
, 1. United Kingdom 8. Final pTOducer goode
2. Final conswner goods 9� Aa follous i IKachine tools
3. As follows~ Textiles 10. Agricultural and textile me,chinsry
4. Clothing 11. Electrical n+achinery
5. Footxear 12. Office machine.e
6. ~rnitwre 13. xon-iinal gooda
7. Motor vehiclee+ 14. Source~ OECD elaboration
Graph 1. Hox Competitive Is Italy?
~ ~'83 Quote dell'Italie e oompetitivit~ 1
ne!le esporq:foni mondieli di mmuistti 109,3
� 108,1 108,3
. .
~o> >,5~ (2 ) co~,~enwn~-.~ ti, ,
Pnui inprosw d~{ mu+uhtti: ,4~ 1,65
PNd InduWidi / IuH~ ~
(fonn: iF51
_ � 7.28
103 7,16 ~ 104,1
101,1
,~r..,L..~.. i~ �
.114 . \ 1 ~,~Z
'1
9 6,95 6,90 7,02
;
(3)
Quota dsll'Italie in voiume
. 8~~y wll~ ~tportuioni di m~nufani
95 6,51 � ~ pruti 1975 d~i PN+i induttri~li
� (Fqnq; QNV)
93,5
6,40
91 6,3
1970 71 72 13 74 75 76 7] 78 79 80 8t
Key1
1. Italy's shaxe of (and con~petitive position in) the xorld market for
exportB of manufactured goods
2. Competitiv~ position. Wholesale prices for ma,nufactured good4= Indus-
trial countries vis-a-vie Italy (source: IP9 [expe~naion unkno~+n])
3. Italy's share of the volume of exports nf marnxfactured gooda (in 1975
prices) by the industrialized countriee (sourca~ UN)
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and therefore toward an increasingly deciP~ve presence of the multinationals.
This has led to an ~ntensification of the innovative content of production
~ processes ani p~roducts and has therefore served to create a void in certain
traditional sectors of xorld trade--textilee, clothing, footwear~ ar~d so
j forth--a void xhich inatead of being filled by the netr "emergent" couirtriea is
~ experiencing a massive infusion of activity by the Italian econo~ay.
2. PStporte
Despite the pzesent difficult situation, the picture that emerges from a
detailed anlysis of the secto~r-by-sector composition of the Italian be~lance
of payments is still relatively reassurin~. The Italian share of the export
~rade in manufactured goods compared to the ehare of the other industriali~ed
co-antries increased--during th~ 1970's--to 7.4 percent from 6.8 perceirt, and
this appears to have been due basically to f~ctora relating to comp~titiveness;
there is~ in fact, a positive correlation betxeen the Itallan ahare of this
- trade, on the one hand, ar~d the i~ex of competitiveness (stated in terms of
xholesale grices for Italian manufactured goods comp~red ~ith the corresponding
prices offered by Italy's competition). (3ee Graph 1.) 3ome of the p~rtici-
pants in the discussion did not declare themsalves ln opposition to the thesis
(~ahich has increasingly been present in the press a;3 in official statementa)
to the effect that the dyna.mics of Italy's trade xith foreign countries ~s
evolving into a structure characteriatic of a developing country. Indeed, the
analysis based on the ma.ture sectors classit'ica,tion appea~.~ to have been
superseded. One must instead speak in terms of~ a) mature prc.~ucts, construed
to mean those pruducts th~.t are rapidly defeated either by the developing coun-
tries (loK wages, low pricea) or by the advanced countries (more ef.ficierrt
technologies and the resultant lo~ prices, or qualitative improvements)i b)
mature technologies, that is to say, those xhich are quickly transfarable to
the emergent countries (petrochemicals, in the case of the OPEC countries)=
a~ c) mature comp~.nies p~esent in those sectors xhera there is an obvious
lack of organizational and managerial factors accot~panied by techno].ogical
shortcomings, including the mass-production economies at the national and
international levels. If one uses this clasa.,ification, it does not seem that
the ba.lance sheet for the structural evoluti~n of Ita.lian specialization can
be harshly criticized.
First of all, it is important to analyze the situation with respect to consumer
~oods~ for the fact is that Italian exports are substantially oriented toward
these goods. As in the case of certain so-called traditiona.l sectors (tex-
tiles. clothing, furniture and so forth), Italy recorded--in the 1970's--indi-
ces of speciali2ation and competitiveness that rrere either stable or actually
hi~ and contirru~ng to rise~ in a nwnber of sectors linkad to tha machine-
building ir~dustr~ (see Graph 2). These were sectors associated Kith the
production of tyose consumer goods tha export og which produced superior
results for Ita,ly, as for example textile, Koodxorking and leather~+orking
ma.chinery.
Italy has, moreover~ recorded notexorthy successes in the export of machine
tools for metalxorking; printing presseai machine components= and agricultural
equipment. These axe sectors xhich have a content of technological innovation
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that is more closely linked to applied research and experimentation at the
engineering level than to labor.atory research. A.distinction thus becomes
apparent between products that are linked to innovations derived f~om basic
research~ on the one har~d, and goods associated xith engineering "knoW hoK"
and applied research--areas in xhich Italy still demonstrates a cape.city for
gro~rth .
In thE area of technologically advanceci products, Italy demonstra,tes consider
able lag--a circumstance xhich may TMz~haps stem from several different causest
1) Some of these sectors are surrounded by barr~ere calculated to pr~clude the
entry of new competitors; this is certainly true in the case of electmnic
' components. 2. The policy of a progressive devaluation of the lira--a policy
which Ita1y ha.s followed for 12 years--has produced adverse ef`fects on the
structure of production, by favoring the protection of traditional products
and serving as a disincentive to innovation. 3. The insufficiency of finan-
cial resources for use in reaeasch and development has aloxed technological
reconversion; ir~deed, it must be remembered that the structure of Italian
companies is more dependent on externa.l borroxing than ia the case in other
EEC countries. 4. The lack of explicit iriterve~ntion in the form of an
adequate irdustrial policy has mt~de it difficult to provide incentives for
irrvestment in research.
These considerations ra.ise some ~uestions concerning the future prospects of
the Italian export trade, particularly in those sectors where the competition
comes from efficient and highly tested industries such as the German, Japanese
and U.S. iniustries. Ir~deed, it xas the "advanced" countries that in the
decade of the 1970's caused Italian exports to declirbe eignificantly in terms
of percentages (10 points in electrical household appliancea~ 3.5 points in
office machines, 3 points in motor vehicles). As for the competition f~om
countries of relatively recent industrialization (Brazil~ Mexico, Taixan~
Hong Kong), it ahould be noted that the "emergeni" countries of the 1970's
have concentrated on only a few sectora that could pose a specific t,hreat to
Italian production. This is the ca.se in the textile, clothing, footKear,
leather and hides sectors. Zn other sectors, the penetration of the ~mergent
countries has entered into competition Kith Japanese, American and German
industry (civilian electronics, assembly processes~ small household electric
appliances~ optical instruments and precision equipment)--products, in other
words~ that do not have a significa,nt impact on the Italian econo~qy. In
other sectors (furniture~ ceramics~ 3ewelry~ sports equipmerit), the experience
and specialization of the concerned Ita.lian companies serve to restrict the
capacity for penetra.tion by the emergerrt countries. Among other things, xe
are talking about exports of goods that have a limited elasticity with respect
to pric~, or that serve to limit the danger that Italy's trade posit~on xill
be threatened by the price xax of the emergent countries. It is in the inter-
mediate sectors~ on the other hand, that the competition relates to price
(steel~ intermediate textiles) ra.ther than to clothing and metalworking in
general. Overall~ the "price sensitivity" of the goods that Italy exports is
therefore no greater than is the case in other countriee.
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3. Importa

~ The cost of petroleum imports has for years been the historic "hole" in Ita.ly's
trade balance. It is a bottomless pit that sWalloxs up bi'_lions of dollars~
. and it is di~ficult to add anything new by xay of comment e.~ccept perhaps to say
that the possibilities for corr~ecting the situation axe s'_im if not actually
nonexistent~ at lea.st in the opinion of some~ that is, of course, unless the
aforesaid "pit" draws the economy doxn to extremely low levels of activity.
The tra,de deficit for the chemica~ i:~~?stry is second~ at the present time,
only to the petroleum deficit. The crisis stems from ~,he difficulties of
public and private industry and ~om th~ associated failure of the grandiose
investments ma,de in the South, which kere chara~,cterized by an exceedingly high
ca.pital-product a~d capita.l-labor ratio. The deficit in the food sector xas
intensified not only by the problems deriving ~om membership in the Common
Market but also by factors relating to cha.nges in conawner tas~es--changes in
response to which the Italian food production system has not demonstrated
sufficierrt ca.pacity for acLaptation. On the other hani~ one can point to a
positive factor--the currently favora.ble gosition of a sector that tradition-
ally shows a deficit, na,mely, the transportation equipment sector.
4. Prospects
Unlike the model of the 195~~s ~1 196o's~ khich xas based essentially on the
low cost of labor and ra.w ma.terials, in the 1970's the mechanism that governs
the Italia.n economy in its relations kith foreign countries changed substan-
tially. On the one hand the crisis of big industry coupled With the develop-
ment of the sma.ll ~nd medium-scale enterprises irrtegrated irrto the Common
Maxket, and on the other hand the special evolution of public fina,nce~ have
helped to determine the structure of the types of foreigr. trade described
above. Notably, in Italy less than 20 percerrt of public expeniiture is covered
by new taxes~ whereas in other developed countries (F~ance, The Netherlands~
the Scar~dina.vian countries and Great Brita,in) the increasing outlays have been
fina.nced by appropriate fiscal rna,nagement. The necessary public expenditures
are therefore financed largely through the creation of a monetary ba.se. Ac-
cording to some of the authors of the report~ it is precisely this massive
indebtedness that created the conditions for the inflationw,ry differential and
therefox~e for the imba,lances in foreign tradet nonetheless, it is probably
this model of development--based on the expansion of direct and indirect tra.ns-
fer payments to businesses and to families--that has made possible the trans-
formation of the Italian economy from an economy centered en a fex laxge com-
nanies in the irrlustrial triangle to one that is widely distributed throughout
extensive geographical area.s.
The same policy of devaluation has been essential to the maintenance of the
campetitive position of the export companies and therefore also to the ma.in-
tena.nce of the level of employment. The pas~ticipants in the discussion ex-
~ressed con~iderable doubt as to the poasibility of continuing such a policy.
In particular, the Italian ecanomic system is demonstrating today--by compari-
son with 10 or 15 years a~o--a more rapid adaptation to the neW levels of the
exchange rate, thereby lessening the classic positive effects of a devalua,tion.
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Gra,ph 2. Machinery Is on the Upsxing, Hoxever (in billions of lire)
- :~.ooo ~ ~
9.000 ~ . ~
; ~ i ~ . M.�.~~.
$.ooo ~E I
~.ooo ~ ~ ~
8.000
s.ooo (2 ) Abbqlam~nto .
' , ~r.~.~�.r~
4.000 ~ ~
3.000 ~ 3 ~ Teaik
2,000
1.000 ~r~� '
0
CF~imia ~ ~fiini ~1}~
-1.000
-2.000 Alimentan ( 5 ~ ~ .
~~~~~~~..._N_~
-3.000
-4.000
1974 1976 1976 1977 1978 1979 1980 /981
on+~� -~o
Key s
i. Mschinez7r 4. Qiemicals and dimilar products
2. Clothing 5� P~u~
3. Textiles 6. January-August
Graph 3. The Differentials for Italy (index for 1978 = 100)
~z1 Indic~ 19)S =100 ,...~~~N
~ 19 ~ 1~ Inflazbrn reletiva (Itali~ - Ces~rM~~
117
115 ~
113 .�~M~~�~~ ,
t 11 Lir. - Ecu ( 2) '
109
107 1980 1981
G F M A M G L A S 0 N 0 G F M A M G L A S 0 N D
Key t
1. Relative ir~flation Italy vis-a-vis 8'~C)
2. Lira vis-a-vis ECU [~E~ropean Currency Unit]
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Still another ma,jor question mark--one that bears on the future of the Italian
export tra,de--concerns the methods of fina.ncing the structural disequilibrium
of the trade balance on the international financial markets. In fact, the
sharp decline in the surplus of the petroleum-producing countries (even if--in
the 3udgment of all the participants--xe are dealing xith a cyclic phenomenon)
is reflected both in terms of a decreased absorption of goods by these coun-
tries and in terms of a decreased availability of funis on.the Elirodollar
maxket and~ in general, on t,he international financial market. This trend
could also prove to be a special aource of concern for an economic aystem such
a.s the Italian system in Hhich financial protectionism has--by impeding the
competition of foreign companies--greatly limited the capacity for acquiring
liquid asaets on the international market. In this connection~ some of the
economists emphasized that this policy had brought about an increasingly
massive direct presence of the economic managera on the international finan-
cial maxket. The Italian companies are accordingly relatively leas active in
foreign countries, having increaaed their oxn indebtednesa in order to finance
their operations. The companies are therefore tending to integra~� themselves
xith the rest of the xorld in terms of assets and capital, acquirit~,r the
foreign exchange frhich enables i.`~e Italian authorities to replenish `,heir
reserves by means of operations on the foreign exchange markets. In addition~
there is the fact that the behavior of the dollar--which continues to be
quoted at high prices because of the Reagan monetary policy rather than
because of any actua.l conditions of strength on the past of the American eco-
nomic system--is creating uncertainty ~?ith rega.rd to the terms of payment on
the international financial ma,rkets.
5. Proposals
In conclusion, the picture that emergea from t~he analysis of the principal
specializations of Italy's foreign trade is not one of the roaiest, but neither
is it one of the gloomiest. There are undoubtedly xeak spots--xeak apots that
have become structural--in the trade balance~ but the discussion of the econo-
mists ha.s given rise to several proposals relating to industrial and trade
policy. In certain strategic sectors the ma3or decisions must be made by the
public ma.nagers (imrestmenta in the energy, electronics and telematics
sectors).
Or~anization of Public Demand
It is true that we axe dealing with sectors in which Italy suffere ~om tech-
nological lags, but it is ndt inevita.ble that theae should be insurmountable
barriers or that one must continue to compete only in the rear trenchea.
Rather than speak in terms of generic industrial recomersion~ wt?at is needed
is to concentra.te on applied research, on supporting the 3iffusiun of innova-
�ion throughout sma.ll and mediwn-scale industry.
coP~~cKr ~ zL rloxno i982 �
1 o9ryt
cso: 3104/223
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ITALY
LCUNOMIC
PROBLEM OF ABSENTEEISM, MOBILITY IN IN~USTRY DISCUSSED
Absenteeism, Mobility Decrease
Milan CORRIERE DELLA SERA in Italian 6 May 82 p 15
[Article: "Absenteeism and Mobility: Is It True That Someone in Italy is Working
Like a Japanese?"] ~
[TextJ We are attempting to make an initial estimate of
two phenomena that are at the center of new industrial rela-
tionships.
The data show that despite some people's optimism the problems
are very far from being solved. Some results have occurred
more because of the economic situation and the weakness of
the union than because a change has taken place in relations
between business and labnT,
The unions and bu~iness management nc~w seem to be in agreement on at least two
points: absenteeism in factories is on the downswing, and the initial experiment
of moving from one company to another is proving to be a failure. However, the
agreement goes no further; it stops there. Both the causes that have produced
these two trends and the possible merits and responsibility involved are assessed
in different ways. '
CORRIERE DELL'ECONOMIA has made a comparison of the various positions, as it often
does, by gathering a series of statements "directly~from the source." We are re-
porting them along with other supporting information and two statements made to
us by thc president of the Turin Industrial Union, Sergio Pininfarina, and by
the central director for personnel and organization at Alfa Romeo, Giuseppe Medusa.
What do these signs mean? Are we witnessing a change in behavior? A change in
industrial relations? Can it.be true that Italians are now working like Japanese?
Before giving the flovr to the parties involved, it will be helpful to take a
quick look at the figures on these new trends in order to put them into~perspective.
Let's b~~gin with absenteeism. ~
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Official data show absenteeism in quite a new light: from 1979 to 1981,
;~i,ticticc~ from work in the Milan area (a significant benchmark for national
, comparison) have fallen by 2 percent in general manufacturing. This decrease
is a bit too slight to indicate that the problem is behind us. There has been
' a change, maybe even a turnaround, but it is too soon to call it a definite
' downturn.
If we take a look at the reasons most frequently given for not coming to the
factory or office (see the two pertinent graphs on following pages~, we see
that absences have been reduced mainly because of less conflict. In other
words, there have been fewer strikes. Absences because of illness (the cate-
gory where the most significant abuses are found) have stayed at the same level
as in the past.
Wt~at weight, then, can be given to statements (which industrialists have been
making, too) that absenteeism is being greatly reduced?
There probably are individual companies where this trend has taken on exceptional
proportions. This is just an affirmation that cannot be supported by precise
statistical data, but it is confirmed indirectly by what has been happening at
Fiat, where absences have fallen off so much that it would seem that workers
are coming in even though they are ill.
Why is all this happening?
One ~~nswer is obvious : concern about keeping jobs and massive, widespread
recourse to the Wage Supplement Fund ha.ve induced lesser qualified workers to
he more careful (we should remember that some companies have hastened to add
even habitual absentees to the Wage Supplement list). The union's attitude
h:is changed; it is no longer ready to protect excessive absenteeism. The judi-
ciary's att~tude has also changed; it has descended into the arena of public
employment to .:~~~.bat cumpiiaui, decturs and has or'.~n npheld pre~~i~~~ns for
dismissal adopted by private business. ~
Now we come to mobility.
The figures supplied by the Piedmont Labor Office (this is the only region
where an "official" experiment has been done on intercompany mobility) leave
no room for doubt: workers are rejecting job offers and the companies are rejec-
ting workers. In short, it is a complete fiasco, despite the proof of availa-
hility provided by the union.
'I'hc rc~isons for failure are obvious: businesses are reluctant to hire trans-
fcr workers because they think the least trustworthy show up on "the list."
'fhosc who work ih a big business look askance at a job in a smaller business
her:~t~se there is less union "protection," less job security and, ~enerally,
l~,aer wages. Finally, there is the tendency to put off quitting till the last
minute in order to take advantage of the Wage Supplement Fund (even with a
second job without loss of seniority and, therefore, loss of "step" raises and
severance pay).
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What conclusions can be drawn?
Abuse of absenteeism and low worker mo..ility remain problems to be solved.
In the first case, the new trend's departure from figures reached in the past
is to be attributed more to the economic situation, to prudence, or fear then
to a greater sense of responsibility or a different attitude.
No one has thought of introducing stricter rules against abuse, because~--it
has been said--the workers have learned their lesson. In some cases, existing
guarantees have even gotten worse, as in the case of supervision where the USL
[Office of Studies and Legislation] have certainly not shown any greater effi-
ciency than the INAM [National Health Insurance Institute].
The same can be said for the other problem under discussion. It is sympto~
atic that Confindustria [General Confederation of Italian Industry] has now
forgotten, or nearly forgotten, tMe employment and mobility provisions that
were once at the top of its list of demands. One might almost get the imprps-
sion that business prefers to count on the union's weakness as long as there
are no precise norms. One indication of this is that what has been accepced
in Turin has not happened in other regions, where labor representatives may
not have been as weak or as worried as the Piedmontese. In other words, the
threat of layoffs has forced the union to make a virtue of necessity.
Does business not want to take advantage of the situation to retake ground
lost in the past or use it to "destroy" the union for good? But what would
happen if power relations changed?
One thing is certain: no better industrial relations than presently exist can
be built on a changeable economic situation and on fear.
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.1971 - ~13 ) Fo~1s� rastra el~bonzfons w dMi '.,Co~riA~rla~,
(1) Main reasons for labor absenteeism
(2) Causes of absenteeism in Italy (manufacturing excluding construction)
(3) Ratio of hours lost and hours worked (9) leaves 1.00-1.50 pct
(4) Rate in percent (10) Job-related illness and
(S) Total causes 10.22-11,95 F�rcent accidents 1.07-0.71 pct
Non-job related illness 5.49- 6.75 " (11) Honc;ymoon leave 0.15-0.08 pct
(7) hlaternity 1.28- 1.07 " (12) Othe~r causes 0.17-0.05 pct
(t3) Strikes 1.06- 1.80 " (13) Source: our interpretation of
data from Confindustria
i
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, (In ustna mar~ifattutlsra eacNlee catruzioM) CuilpioM.dl a=I~nd~
3 Tsi~o% 'i Q1 oomp?~d~nt~tt~awllaoa~
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~
" (12)
(1) Sharp Drop in Strikes in Lombardy
(2) Causes of absenteeism in the Milan area (manufacturing excluding construction)
Ratio of hours :ost and hours worked; the data are tak~n from a sample of
manufacturing companies, including all those with more than 500 employees)
(3) Rate in percent ~
(4) Total of causes of absenteeism 12.61-10.76 percent
(5) Non-job related-illness ~ 6.98- 6.47 "
- (6) Maternity 1.69- 1.31 "
(7) Strikes 1.64-_0.72 "
(8) I.eave of absence 1.19- 1.71 "
(9j ,lob-related illness and accidents 0.43- 0.41 "
I 1(11 Otl~cr causes 0. 57- 0.05 "
( l 1) I lo~icymoons 0.11- 0. 09 "
(12) Source: our interpretation of data from Assolombarda
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Reemployrient ''Fiasco' in Piedmont
Milan CORRIERE DELLA SERA in Italiari 6 May 82 p 15
CAtticle by Giuseppe d'Adda and Renzo Ruffielli: "The Reemployment Mechanism
Has Been a'Fiasco' in Piedmont"]
[Text] With the passing months the "list" has gotten a little shorter. The
7,500 workers put on the mobility list by Fiat now number 6,550. However,
the "reemploymer~t" plan agreed to by the company and the unions after the
sharpest dispute in the last 10 years has not been of any help here. The 950
employees who have dr~pped off of the list have found new jobs "on their own."
They have therefore been "spontaneously" cut from the list. All the others
are waiting for a"labor-market management" instrument to work when it has
so far practically not gotten off the ground.
Labor mobility was started experimentally in Turin and Piedmont on 15 February.
The workers on the list were offered 198 jobs over a 2-month period. To fill
these jobs the labor office called 651 laid-off workers; 71 of these did not
show up and 556 turned them down. Only 24 took the jobs offered. But not
~ll of these worked out either: 12 were not hired because they failed either
the medical exam or the probationary period.
The end of the first 2 months of the testing period has been marked by a series
of arguments over the "refusals."
For business, the workers' saying "no" means the experiment has failed, but for
the unions it is a much more serious matter that other companies have refused
to hire the workers laid off by Fiat.
Franco Lotito, national secretary of the FLM [Federation of Metalworkers], says,
"In many cases the jobs offered in no way matched the duties and qualifications
of the jobs the workers had at Fiat."
Sergio Puppo, the other national secretary of the FLM, says, "Management must
explain why the workers on the mobility list never succeed in finding a job
while thousands of other former Fiat employees have already changed jobs. At
this point you have to wonder whether it may not be a disadvantage to be on
the list."
1
I~or ttie purposes of worker coordination on the Wage Supplement Fund, the jobs
offcrecl hy the recmployment office were refused for quite valid reasons. Most
of the new jobs were in companies with fewer than 15 workers, and they could be
t' i red w i thout cause .
"M~iny of the refusals were due to errors made by Fiat in drawing up the list.
"In one case, a machinist was offered a job as an electrician, and he just
rould not do it."
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- 1'hc Turin Industrial Union feels that job mobility has not worked mainly because
- there are no sanctions against those who turn down new jobs. Such sanctions,
which even some unions agree with, would include cutting off payments from the
Wage Supplement Fund (which comes to more than 90 percent of net wages). This
''corrective" should therefore be introduced as soon as possible into the present
system.
But even businessmen do not deny that it will take a long time for all the laid=
off workers on the list to find a job, even if sanctions are introduced. Still,
the experiment does have great value, especially for the future.
"When we set up the job mobility system," said Cesare Annibaldi, a Fiat indus-
trial relations official, "we knew it could not work perfectly overnight. In
a situation like this, with a very weak labor market, the difficulties we are
having should be considered normal. But when the labor market recovers somewhat,
job mobility will prove to be an instrument well adapted to its needs. We can
avoid repeating what happened in 1977-78 when companies that needed personnel
coiild not find anybody even though there were thousands of workers on Wa~e Sup-
plement. For this reason, the union, too, should work hard to make job mobility
succeed."
'Presentism' Becomes a Problem
Milan CORRIERE UELLA SERA in Italian 6 May 82 p 15
[Article: "And Now There Is the Problem of 'Presentism
[Text] The winds of crisis have blown away many things. B~th myths and cer- ~
tainties have crumbled, and habits and style have changed, even and especially
in the factories. The myth of the secure corporation has been buried by the
Wage Supplement Fund and layoffs. The union's militant image has faded, but
managementi's image has been "freshened up." Power relationships have visibly
changed over a decade.
Nobody is writing about the problems of "disaffection" or "refusal to work"
any more. Nobody seems to remember the hundreds of young people back in 1978-79
who quit Fiat after barely 2-3 months on the "line" at Mirafiori because "you
can earn 500,000 lire a month anywhere." �
Absenteeism is among the more ~r less illustrious victims of~the crisis. Three
years ago, on 1 February in Naples (or, rather, in Pomigliano d'Arco), the strike
called by the union over the murder of Guido Rossa turned into a long weekend.
Almost 50 percent of the Alfasud w~rkers, about 7,500 people, "stretched" the
, protest closing (which came on a Wedne.:day) with 2 days of sick leave (Thursday
anJ ~riday).
Thc company bewailed a loss of 3 billion lire. The union condemned the episode.
But the long weekend did not stir up too much of a fuss. For Pomig ia~o, people
saia, it was not all that "abnormal." In fact, Alfasud has remained, rightly or
wrongly, the symbol of the ungovernable, unmanageable factory.
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I~i 3 years a lot of things have changed in the automobile industry on the out-
skirts of Naples. In recent days, Ettore Massacesi, president of Alfa Romeo,
said, "The rate of absenteeism for all of 1981 came to nearly 16.5 percent;
in the first 2 months of this year it has fallen to 11.9 percent." And even
this record has been surpassed. In March, when the company was deciding on
the "lists" of workers to be laid off for 12 months, an all-time low of 6-7 per-
~ cent was reached. In April, when the most critical moment had passed, things
got a little worse. But absenteeism still stood at about 8-9 percent, an average
that would have been considered unattainable only a few months before. Every-
thing seems to indicate that even in "settling-down" phases absenteeism will
increase only s.lightly over present rates.
Pomigliano d'Arco is thus no longer a negative symbol but is becom2ng a"normal"
plant. But the outcome of the "case" of Alfasud is only the most visible aspect
of a more general trend: absenteeism has been declin~.ng almost everywhere. in
companies of all sizes, the "medically certified binge"--as it was called in
former years--has been dwindling. This is true not only in industry; in pub-
lic administration, too, the figure of the Grand Absentee, as Walter Tobagi
dubbed him, is disappearing.
Gaetano, the Catania postman who managed to stay home 4 years out of S on the
job, has been turned in and sent to jail. In Turin, people who moonlighted by
Ueing absent more than 100 days a year are down to one job.
In 1968 before the autumn heat wave, absenteeism in Italy went up on an average
of 8-9 percent. Then at the beginning of the 1970's the trend was noticeably
higher because--it is unanimously felt--the practice of not paying the worker
for the first 3 days leave was eliminated and company doctors' ~�~taminations were
abolished.
In 1974, Confindustria noted an average absenteeisin quite close to 14 percent.
It was calculated that "abusive absenteeism" exceeded 4 percent. This came to
6 trillion lire a year wasted for the national economy.
` In this same period, companies found themselves obliged to increase staff per-
sonnel to account for a rather high average of absences, one that had come to
be considered a structural phenomenon.
Alfa Romeo even "structured" its staffing to deal automatically with a 24 percent
rate of absenteeism.
Since 1974 the averages have been gradually diminishing, but the most noticeable
clror has been shown since 1980. In the last 2 years it has fallen almost 10 ~er-
cent at Piat. At Mirafiori, absentees now average 5-6 percent of the work force.
'I'}iis is a record that is hard to beat in Italy.
'I'o a lcsser extent, the same thing has happened in the other companies of Italy.
Pre-1J69 rates have not yet returned, but they are coming close. All that does
not take into account the effects "induced" by the fall in absenteeism. Micro-
c:onflicts, for example, have almost disappeared (at Alfasud the average was 1,000
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niinistrikes a,year; at~Fiat individual episodes took more than 3 typewritten pages
- a day to record). Tardiness diminished noticeably.
"Absenteeism is not a problem for business at this time," admrts. Felice Mor-
tillaro, director of Federmeccanica. "Presentism" is caused by fear of losing
one's job, th~~ end of a kind of "condoning" attitude on the part of ~;~e union,
the judiciary and public opinion and by less conflict in the plant; yet another
phenomenon is at least par.tly the cause of it: supernumerary personnel. As
absences have diminished, companies have essentially found themselves overstaffed.
Fiat has "counted" in its plant more than 12,OOQ people more than in the '70's.
Alfa Romeo has at least 3,000 more. That has happend while, on paper, the labor
force has stayed the same. "Presentism" (which was once limited to paid days)
is therefore one of the causes of the increase in applications to tfie Wage Sup-
plement Fund and in layoffs.
It now remains to be seen whether the new rates of absenteeism will stabilize
at present levels even if the crisis takes a positive turn. Various husiness-
men are optimistic on this subject. However, Confindustria recalls that "absen-
ces are closely linked to the economic situation: they increase when the economy
gets better."
Wage Supplement Sanctions Advocated
Milan CORRIERE DELLA SERA in Italian 6 May 82 p 15
[Article by Sergio Pininfarina, president of the Turin Industrial Union:
"Whoever Turns Down a Job Chan~e Should Lose Wage Supplement Benefits"]
[Text] The problem of worker mobility is not only a technical, union problem.
Assurning a greater area of agreement among the various parties in their quest
for common objectives in union matters, the problem is closely linked to the
maturation process of the industrial culture in Italy. It must be patterned
on the models'of more advanced Western countries, even in terms of labor
flexibility.
It is certainly due to this process that~this principle became a part of the
metalworkers' contract in 1979,but at 3 years remove it has not yet taken
practical effect. In Turin, where its application was sorely eontested in
the notoriously difficult autumn of 1980, the first real experiment in worker
mobility was launched a couple of months ago on the basis of what we think is
a very significant agreement among the parties involved.
Unfortunately, however, the concrete implementation of the principle of worker
mobility still lacks an essential element that was conceived as a key to rein-
vigorating the labor market and protecting the unemployed. I mean loss of bene-
fits from the Wage Supplement Ftind for those workers who have been called in by
the employment office and who turn down the new jobs because they prefer to stay
"on the Fund."
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i
'I'I~ i ti cx~~lains w}iy thc 'I'urin experiment has had such a hard time getting started.
~In 2 rnonths 20U jobs were offered, which rebuts any scepticism that the worker
mobility mechanism can work even in times of great employment crisis; but of
the 650 workers called in, 625 either did n%,t show up or rejected the jobs
offered.
Mobility on an exclusively voluntary basis is not working. IL is time parliament
realized this and drew the conclusions that businessmen and unionists reached at
the end of 1979. Otherwise it is a waste of time to deplore the unemployment
benefit system of the Wage Supplement Fund and decry the seriotzs deficit of the
INPS [National Social Security Institute], which at this rate is fated to worsen
further.
Productivity as Bargaining Counter
Milan CORRIERE DELLA SER.A in Italian 6 May 82 p 15
[Article by Giuseppe Medusa, central personnel and organization d.irector of
Alfa Romeo Auto SpA [Limited]: "A Possible Currency in Exchange for Wage
Raises"; words in slantlines are emphasized in the text]
[Text] Few people are aware that large Italian companies pay for a working day
of about 13 hours while the effective labor performed amounts to barely 5 hours
a day.
Productivity in Wage Bargaining
Milan CORRIERE DELLA SERA in Italian 6 May 82 p 15
[Article by Giuseppe Medusa, central director of personnel and organization,
Alfa Romeo Auto SpA [Limited]: "A Possible Bargaining Counter for Pay Raises";
words in slantlines are emphasiz.ed in the text]
[Text] Few people are aware that large industrial companies in Italy pay for
a 13-hour work day while the actual work performed barely amounts to 5 hours
a day.
/Actual/ working hours have plummeted; the unions have rigidly defended jobs
for all these years while business has invested in labor-saving machinery;
- mobility wit}iin and among mass-production industries has been negotiated at
a possible production loss of 10-15 percent a year: all this is behind the
~;r;~du~il deterioration of production levels, especially in heavy industry.
It is understandable, then, that productivity has become a central issue
in t}ie most recent union negotiations.
'l'his is the climate in which the recent agreement was reached between Alfa
Romeo and the FLM [Fc~deration of Metalworkers]. It is a truly productive pac~
~lot unlike the "produ~:tivity bargaining" of traditional British collective bar-
gaining. Beyond the inevitable rhetoric, the model o" productivity bargaining
has inspired the parties to the negotiations to restore productivity at Alfa
Romeo; t}~e negotiations have been exhausting and pr~tracted, lasting almost
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2 yc~�rti, }~i,t they have made it possible to renew some labor-management proce-
~I~~r�c~ t}~:~t have caused a jump in productivity of over 40 percent in the space
c~ t a fcw weeks .
Tliis recovery has affected actual working hours only marginally, and it is the
result of action by management, but it is also and especially due to a change
in the workers' behavior. Absenteeism fell from about 20-25 percent for all
the 1970's to about 10-15 percent 2 years ago; it is now under 10 percent and
still declining. Mobility between departments has gone back up.
The process of clearing collective bargaining agendas (automatic wage adjust-
ments tend to cancel out any negotiating margin1 and the gradual penetration
of a"crisis mentality" into the rank and file of the union open up concrete
possibilities of linkage between wages and productivity in the immediate future.
It may be concluded, then,�that the problems of /mobility/ and /absenteeism/
can become objective areas of contract negotiations, especially as bargaining
countcrs to obtain wage benefits.
COl'YRIGIiT: 1982 Editoriale del "Corriere della Sera" s.a.s.
878?
CSO: 3104/199
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POLITICAL FEDF~AL R~BI,IC OF G~iMANY
BRAND2' ON SPD~FDP COALITION PROSPDCTS, SPD FUTITRE
nomburg STE~T in Ger~ 1 Jul 82 p 149-150
~Interview with SPD Chairm~u Willy Bran~t by Werner Heilemann and Peter
Pragal: "I Would Sooner Ha~re Them Chop off Both N~y Haade~'
~ext_] ~Questia] I`"r Brandt, the SPD no longer wishea to work tog~ether
with the FDP at all costa. On the contrary-there ia a growing deaire to
ca.rry out unadulterated SPD policies. Would this go so fa~r as to riek a
break with the coalition partx~er ?
~AnsweJ We are not including a breakup in our plaas. We believe we ehould ,
contirnxe to fulfill the mandate the noters gave ue in 1980, if that can re-
sponsibly be done. Tha.t is wby we are honestly trying to put the 1983 ~~t
together.
~Queation] Ie there still a poirit to reaching compromises with a partner
one half of whose members have alreac~y decided to cast in their~lot Mith
the conservativea ?
~Anawe~ Of course there are aocial democrate who ask us these days: What
you people in Bonn are doing now, does it atill make sense ? Aren~t you
making concessions arid in the end g~etting nothing in return ? Buts If one
wants to groveai aad does not have a ma3ority, one must malce compromisea.
The SPD leadership believes that we ahauld not--if at a11 possible-let
direct participation in goverriment policy alip out of our harids in these
difficult times most of all.
~uestio] But the risk you take ie t2za~t the SPD will run itaelf into the
ground. Does the party really want to risk alipping bel.ow the 30 percent
voter preference mark or ian~t it time to g~o into the oppoeition volunta-
rily and so gain in new attractiv~enese ?
~Answe~ The opposition role ie no guaxantec that one will fare better. I
would rather say the point is to g~et one's po:'.itical ideas acroas~as a
~overnment or as an opposition. But if we were forced to gro into the oppo-
sition sooner or later, we would have to build up our atrength anew etart-
ing from the citiea. But you may be sure that this SPD cha.irman would
rather have them chop off both hie ha~ads than to have the party leave its
own chancellor in the lurch.
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~Questio] How cari you work together with a partner in good faith, if one
must a.ssume he is just waitiug for an opportune moment to ~ump ship ?
~Answer~ I admit I have found it diffiault to understand some of the reaent
statements by ~he FDP chairmaiz-and I am not the only ane iri the SPD who
feels this way. But let me add thie: There is not a aingle indication that I
could see, even during the difficult budget negrotiations, for Hane-Dietrich
Genscher having aet hia siglits on a chang~e of coalition. For that matter,
it would be quite somet2:ing to tuai one~e back on the voter maada~a.
~Questio] What is the meaning of the coalition etatement in ths ~;~Q~s favor
made in Hesae at Genacher~a behest ?
~Answe] I don't think that a pericha:lt for ezperimentation was behind it.
The way they must have figured it in Wieebaden an~. in Bonn wae thiss The SPD
and the FD~P tog~ether wi1Z no.t make it. But whether the ~'DP has now asevred
its own suYViva1--I am inclined to doubt that. We soctal democrate eay that
aqyone who wants to see the successee of the soaialist-?iberal coalition--
which even the FAP in Hesse emphasizes--continue ehould vote :or the SPD
this time around. I have a feeling we will do better than was aesumed before
the FDP awitched eides.
~Queatio~ Isn't there good reason to 'belie~.~e tha.t this swi~ch in Hease
will be followed by a switch in Bonn ?
~~nswe] I am not really looking for it which, howevery doee not meaa that
it could not happen. Still, I have the impression tha.t the reactior �n fiae
Darmsta.dt decieion by FDP members aad aympathizera may have dampc+ned thb
enthusiasm for further thoughts of ewitching. The Bundestag fraction oY th~
FLP, which would have to approve ~uch a dscision, is voicing greater reser-
vations cn the sub~ect th,aa it did ~ust a few weeks or months ag~o. The
second factor of uncertainty ia whether the CDU/CSII really wants to hav~e the
FDP as a partner at this time. It ian't 3ust Herr Kohl xho wauld like to see
Herr Genacher switch. There are a.lso the crown princes-Albrecht~ Stolten-
berg, Spaeth and Weizsaecker-and the arch-crowa prince Strause who are a11
doing their best to prevent it because they waat to protect their own chances
for the chancel~orship. The FDP can aee all that~ too.
~uestio~ That ia not much of a consolation. It sounde as thoug~h the Borm
coalition wae being kept alive by nothing more thaa the will to stay in
power.
~Anawe] On all ma3or issues in yeare pa,st, we did maaa~ge to achieve a great
measure of aensible cooperatior.~. between the SPD aad the FDP. In principle,
we should be able to continue. We could do even more. We have now reached a
point at which we could start revitalizing eocialist-liberal ro=orm policiea.
The coalition must regain a perapective so that people don't ~ust have the
feeling ths.t there is a hole being plugged here and there 3ust so the bottom
line comes out right.
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~Question~ Wouldn't it be better under the circumstances for the SPD to
direct more cf it~ attention to t~he Greens and the Alternatives instead of
puttin~ ita money on the FDP whiah is gradually losing ite role as a third
force in paxliament ?
~Answe~ As a theoretical question, I can understand that very well. But
ae far as practical politics i$ concezued, it is very difY'i.cult to take it
ar~y further. It is obvioua that some of those belonging to the Green,/Al.tez~-
native camp are abiding by parliaa~entary rul~e and eschew violence. Wher-
ever that is the case, we cari ait down and talk togrether. But the more im-
portant thing is for the SPD ~i~o make up for issuee it has neglected and
deal with issues such as the protection of the euvironment. To be sure, we
have put a lot of sensible thinge on paper and have achieved this and that.
But for some reason we have not been able to get our policies acroas with
sufficient clarity. While I may be doing them an in~juatice, I do think
these new groups are a passin~-thou~ perhapa not really a short-tei~
phenomenon.
~~uestioJ But if the chancellor has only a half~earted commitment to
tnese policies, we cannot be too sure.
~Answe~ Ecological issues are difficult, of courae. But it is not the
chancellor who is the adversary in this field. The diapute surrounding
thcse issues is difficult above all because there are mat~y people ri~t
nowr in industry who are afraid of losing their 3obs. It is a painstaking
process of mutual understaizding.
~~tuestio] The young people who have turned their ba.cks on the SPD did
not do so solely becauae they are disappointed about the lack of an en-
vironmental policy. Y~Iore than ar~ything else, they Y~ve their doubts about
whether the Schmidt gnvernment i$ willing aad able to carry out a aerious-
minded peace policy.
~tinsweJ Az~yone who ia capable of listening knows how deeply concerned
the chancellor is about the peace issue--and th~ concrete resulte of his
commitment to it ^ce ~,uite substatztial. I,et me remind you of What he and
I said last fa11 on the sub3ect of the peace movement. That looked ae
thou~ we were drifting apart. And if you look at wha.t we say today, you
can see we are close together. A lot has happened. Helmut Schmidt now
perceivea much more strongly the profound, nagging and tortuoue concern
and unrest tha.t has been growiY~g up around us.
~QuestioJ But there are membera of the SPD Bundestag fraction who care
less about the substantive d.isputes and more about waya of nipping the
Greens--and by extension the FDP-in the parliamentary bud by ini~.~ducing
the nritish winner-talce-a11 election syetem.
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~Answe~ ~f there are such ideas being bruited about~ ~ would call them
spurious. I~z practice, fihis would lead to aertain regiona.~-I am merely
thinki.ng of Bavaria.-being repreaented in a one-d.im~ension:~.l wa.y politi-
cally. In a politically aad denominationally polarized cou.~try like the
FRG such a danger would have to be takerl more seriously than elsewhere.
But ~y maiti ob3ection is thiss If it is truo--inspite of evt~rything that
makes me mad about them-that there really ie something to theee new
GAL~s, then it would be disaetrous to nip them in the bud by reeorting to
such a triak. That would not do our democracy a bit of g+ood.
COPYRIGHT 1982 Gruner + Jahr AG & Co.
947a
cso: 3~03/569
41
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, POLITICAL GREECE
~
PROSPECTS FOR PAPANDREOU ERA SURVEYED IN DETAIL
London THE ECONOMIST in English 3-9 Jul 82 pp 3-18
[Article by Stephen Milligan]
[Text] ln country lanes all over Greece, tics today: to hear the cadences and the
whitewashed walls are still daubed with rhythm of his rhetoric at an open-sir rally
' the Socialists' election insignia, a green is spellbinding, even if you cannot under-
rising sun. Everywhere from the bneliest stand Greek. He is also a charming man,
islands to the crowded cities of Athens and those who meet him are hypnotised
and Salonica, the enthusiasm for the by his civility. But he has a disconcerting
ullaghr-the great change-promised by habit of promising one thing arid doing
Mr Andreas Papandreou seems undimin- precisely the opposite. Most of his co!-
ished. A recent opinion poll' found that leagues who worked ~vith him in his
only one Greek in 10 thinks that their father's centrist government in the 1960s
new prime minister is doing a bad job. later deserttd him, angered b~oth by his
This is pretty surprising in view of the double-dealing and his unscrupulousness.
fact that Mr Papandreou has pushed up Mr Papandreou's party, the Panhellen-
- tax revenue by over 50�!o and has com- ic Socialist movement (Pasok), is his own
pletely changed his foreign policy. It now poodle. He set it up after the restoration
looks almost certain that Greece will stay of democtacy in 1974 and he has manipu-
in the European community and Nato lated it ever since. It should be more
and that the United States will be allowed accurately called the Andreas Papan-
to retain its tour bases in Greece. But for dreou party (his father once focmed the
most Greeks, who are more interested in C~eorge Papandreou party). In govern-
style than policy, this matters little. They ment all ministers are totally subservient
have been thrilled by Mr Papandreou's to the whim of the prime minister, who
~ ability to be rude to foreigners (the fact officially runs the defence ministry and
that he himself was a foreignsr for many unofficially the foreign and economics
years as a naturalised American citizen ministries too. One unfortunate minister,
dces no?