Paga Globale (Italy)

Paga globale 🇮🇹
Location: Italy
Definition: Informal wage paid through manipulated formal channels to match the originally agreed "global pay" for the month
Keywords: Italy – EU – Europe – Informal economy – Informal employment – Migration – Modern slavery – Payment – Money – Employment – Tax avoidance
Clusters: Survival – Market – Informal economy – Informal entrepreneurship
Author: Giulio Benedetti
Affiliation: PhD Researcher at Stockholm School of Economics in Riga, Latvia

By Giulio Benedetti, PhD Researcher at Stockholm School of Economics in Riga, Latvia

Paga globale (lit.: global pay) is an informal wage conveyed through formal channels. Two documents are important for its functioning: a sheet recording the hours effectively worked by the employee, who will be paid an agreed fixed sum per hour; and a formal paycheck calculated on the basis of the national collective contract. The latter is manipulated to match the total amount agreed instead of being based on the hours effectively worked. In this way, taxation is minimised, and the worker exchanges the benefits and guarantees of the formal contract for a net earning that can be higher or lower, depending on the situation.

The practice is often used with migrant workers, as it thrives on price differentials between the region of employment and that of the family’s residence. It first appeared in the context of migrations from Southern Italy to the North of the country, alongside the structural changes of the production model happened during the 1980s, the weakening of trade unions, and an increasing individualization of work through subcontracting. (Cillo, Perocco 2016) It is widespread in the metalworking, shipbuilding, and construction sectors. It might have first appeared among skilled shipbuilding workers who were posted to work in the North for short periods of time, but it is also widespread among construction workers, commuting to work on short-term contracts (Caputo, D’Onofrio 2011). Initially, a worker paid via paga globale could earn substantially more than what he would have earned through the application of the formal collective contract. This practice allowed workers to monetize benefits such as paid leaves, that would have been left unused in case of short work trips, typically of the duration of few weeks. However, work conditions associated with the practice rapidly deteriorated, and paga globale spread in the following years to be widely experienced by foreign workers, who are often paid much less than Italian citizens (Skupnjak-Kapić et al. 2005).

Paga globale appeared at a time of transition towards a production model based increasingly on flexibility and smaller productive units. Useful for employers to reduce taxation and the cost of labour, paga globale allows to contain the rigidities of formal collective national contracts, more suited for long-term rather than flexible employment. It also allows to reduce the cost of labour itself, as workers get paid only for the hours effectively worked, without paid leave, sick leave, or any other provision guaranteed by formal regulations. From the point of view of workers, paga globale has represented somehow a coping mechanism, especially viable for migrants. In essence, paga globale is an exchange of benefits and guarantees for cash money.

As real salaries in the last decades progressively decreased, paga globale has been increasingly experienced by foreign migrant workers. In this case, paga globale can be used in long-term contracts as well as daily, piecework employment. If the latter is a form of further precarisation of labour, long term contracts paid by paga globale entail usually the same pay of a formal contract, but with a higher workload and longer shifts. (Panariti 2011) This is made somehow bearable by the even higher differential of prices between Italy and many other worker’s origin countries, which allow them to send remittances home that are still relatively conspicuous in light of the favourable currency exchange. In addition, paga globale entails the providing of a formal contract that, however violated in practice, provide migrants with the key document to periodically renew their residence permit, without which they would be deported.

The fact that paga globale entails a formal transaction makes more difficult to uncover its informal nature during casual controls by state authorities. Paga globale is more easily exposed by the filing of a direct lawsuit by workers. For this reason, the practice is typical of smaller enterprises, where closer relations between workers and employers entail a higher level of reciprocal trust and control. These firms are often subcontractors for larger companies, where maintaining a façade of adherence to formal rules is required.

The spread of paga globale among subcontractors for larger companies accompanied a general trend of flexibilization of labour in the construction and manufacturing sectors in Italy. This process was also underpinned by the easing of controls by state authorities and the gradual decriminalization of labour offences. (Cillo, Perocco 2016) Today, a worker filing a lawsuit against his or her employer on the ground of paga globale is typically only partially refunded. The practice so remains economically advantageous for companies. In addition, accessing justice remains a costly endeavour, both in economic terms and for future job perspectives (Panariti 2011: 243).

As paga globale gradually expanded from Southern Italian workers posted in Northern firms to include foreign workers, related practices were translated too. This is the case of the so-called “hot bed”, the use of the same bed by two or three workers employed throughout different shifts. Born to contain costs among workers posted for brief periods of time, its use is nowadays organised directly by subcontracting firms. Hot bed is related to paga globale in a similar manner as paga globale is connected to subcontracting. Paga globale is useful to small firms’ owners to win the race to the bottom of a tender bid because it allows to calculate a fixed cost per hour worked. Providing common accommodation is a way to further contain costs and increase their predictability (Caputo, D’Onofrio 2011).

When put in relation to job access, paga globale may also relate to patronage and small-scale economies of favours. Finding a job retributed with this scheme requires often some degree of mutual trust and can be the result of a transaction, especially in the case of those workers pressed by the urgence of getting a formal contract to renew their residence permit. The transaction can be either in money or in favours, stemming from ambivalent feelings towards the intermediary.

Paga globale shares similarities with practices related to labour informality such as Alga aploksnē, Travail au noir, and Svart arbete. (Sedlenieks 2018; Montigny 2021; Larsen 2021) The difference is that paga globale adds an element of façade: the wage is conveyed by formal means, as to say bank transfers and paychecks. This difference offers two major practical advantages: being less visible and risky, paga globale can be adopted in long-term work relations, and is compatible with the needs of the biggest economic players and contractors. In addition, the façade provided by paga globale is also valuable to those migrants who are in need to renew their residence permit, the main requisite of which is holding a formal job contract, as in the case of caporalato.

Today the net starting wage of a metalworking employee is around 1,100 euros per 40 hours a week. Workers in subcontracting firms often work up to 10 or 12 hours a day including Saturdays, and in some cases paga globale allows them to earn up to 2,000 euros a month (Skupnjak-Kapić et al. 2005: 45). Figures, however, may vary. In the construction sector, where the length of periods of employment can be unstable, earnings through paga globale may also reach 2,300-2,500 euros per month (Caputo, D’Onofrio 2011: 124). Judiciary investigations, reported by the media, also uncovered situations in which workers of foreign origin are paid 3 to 4€ per hour in the shipbuilding sector, with shifts lasting up to 12 hours, six days a week. In this case, the earning is typically between 1,000 and 1,100 euros, the net starting salary of the formal national collective contract (Mion 2021).

Paga globale is not particularly visible, and it received only limited media coverage through the years, mainly from local newspapers. Difficult to spot, it emerges through ethnographic accounts and judiciary investigations, often opposed discursively to paga sindacale (lit: union pay). Despite the denounces of the trade unions however, paga globale remains a reality mainly known just to those experiencing it.

Funding

This research was realized as part of the EU Commission Horizon2020 MSCA Innovative Training Networks (MSCA-ITN) project MARKETS: Mapping Uncertainties, Challenges and Future Opportunities of Emerging Markets: Informal Barriers, Business Environments and Future Trends in Eastern Europe, The Caucasus and Central Asia, Grant agreement ID: 861034.

References

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Cillo, R., & Perocco, F. 2016. ‘Subappalto e sfruttamento differenziale dei lavoratori immigrati: il caso di tre settori in Italia’. 101-123.

Larsen, L. 2021. ‘Svart arbete’, Global Informality Project, https://www.in-formality.com/wiki/index.php?title=Svart_Arbete_(Sweden). January 2022.

Montigny, C. 2021. ‘Travail au noir’, Global Informality Project, https://www.in-formality.com/wiki/index.php?title=Travail_au_noir_(France). Last accessed: January 2022.

Mion, C. (2021) “I nuovi schiavi, il “caporale” dei subappalti preso a Marghera.” La Nuova Venezia, 20 April 2021.

Sedlenieks, K 2018. ‘Alga aploksnē’, in Ledeneva, A. (ed.) Global Encylopaedia of Informality. Vol. 2. London: UCL Press.

Skupnjak-Kapić, S., Milas, G., Mustapi, M., Karaji, N. 2005. ‘Cross-border Labour Migration Flows Croatia-Italy: Focus on Shipbuilding’. International Organization for Migration.

Panariti, L. 2011. ‘Tute blu e principesse. L’organizzazione del lavoro nel cantiere di Monfalcone (1987-2007)’. EUT Edizioni Università di Trieste.