Corporate & commercial Law

Italian employment law: how are salaries determined in Italy?

Art. 4 of Italian Constitution says: “The Republic recognizes the right of all citizens to work and promotes the conditions that make this right effective. Every citizen has the duty to perform, according to his or her ability and choice, an activity or function that contributes to the material or spiritual progress of society”

Italian Employment Legal Sources

The Workers’ Statute (Statuto dei Lavoratori)

We could define Law No. 300/70 as the most important and thorough source of legislation on workers’ rights. Better known as the Workers’ Statute, this law has as its title “Norms on the protection of workers’ freedom and dignity, trade union freedom and trade union activity in the workplace and norms on employment.” It thus represents a veritable vademecum for workers and employers.

The law has a total of 41 articles, divided into 6 titles concerning the following issues:

  • The first: Freedom and dignity of workers
  • The second: Freedom of Association
  • The third: Trade union activity
  • The fourth: Miscellaneous and general provisions
  • The fifth: Placement
  • The sixth: Final and penal provisions

This is clearly an extensive source of legislation and one that, despite being enacted now 50 years ago, continues to be one of the main regulatory landmarks in labor matters.

Law No. 604/66

Here we are going to talk specifically about a law that deals with the thorny subject of individual dismissals. Complicated topic both on a human and legislative level, as over the years, multiple legal provisions have overlapped.

According to Article 1 of the law, dismissal without just cause is prohibited. In fact, the article states, “in the employment relationship for an indefinite period of time […] the dismissal of the employee can only take place for just cause within the meaning of Article 2119 of the Civil Code or for a reasonable cause.”

Many times there is a tendency to confuse dismissal for reasonable cause and dismissal for cause. To learn more, you can read our article on the differences between the two dismissals.

Another cornerstone of Law 604/66 is the prohibition of discriminatory dismissal. It is stipulated that the employer has the burden of adducing the necessary evidence (both just cause and justified reason). According to the law, the employee may challenge the dismissal within 60 days of the notice (which must be in writing).

In cases where a dismissal for objective or subjective justification or for reasonable cause is declared unlawful by the court, the employee may be compensated by the payment of an economic indemnity that can range from 6 to 36 months’ pay depending on length of service. 

It is important to note that under Law 604/66 alone, there is an impossibility of dismissal without reasonable cause but in fact no obligation for reinstatement, considering instead economic compensation. Instead, reinstatement is provided for in Article 18 of the Workers’ Statute, but is limited to companies with more than 15 employees.

The Treu Law (196/97)

Law No. 196/97, better known as the Treu Law, is named after the then minister of labor in the government of those years, Tiziano Treu. in practical terms it represents the law that introduced the first forms of flexible work in Italy with the aim of combating unemployment.

The law directly regulates some institutions such as apprenticeships and temporary employment, providing provisions on future legislative production and other provisions referring to social bargaining. It regulates more comprehensively the figure of socially useful work, and introduces the coordinated and continuous collaboration contract, as well as the project contract.

The Biagi Law (30/03)

Similar in subject matter is the Biagi Law, which marked an important step in the landscape of labor laws in Italy. Law No. 30 of 2003 is named after its main promoter, Marco Biagi, a prominent Italian labor lawyer and academic. The law itself is actually nothing more than a delegation to the government, which was then effectively implemented by dlsg. no.276/03.

Summarizing the main contents and innovations compared to the Treu law, we can say that the themes are:

  • Flexibility of labor contracts
  • Supply contracts
  • Apprenticeship contracts
  • Insertion contracts
  • Coordinated and continuous collaborations

Again, the main premise of the law was based on the concept that flexibility in exit and entry into the labor market is the best means to facilitate the creation of new jobs while leaving entrepreneurs free to manage the workforce according to operational needs.

The average salary in Italy

The national average RAL (Gross Annual Salary) is 30,284 euros, according to JobPricing Observatory data collected in 2022 taking private sector employees as a reference.

The average RAL in Italy for executives is 103,418 euros, middle managers earn 55,632 euros, office workers 32,174 euros and blue-collar workers 25,522 euros per year.

The net salary varies according to the number of monthly payments in the contract (whether there is a 13th or 14th month) and progressive taxation. On 13 monthly salaries, the net salary in Italy is €1,818 for white-collar workers and €1,524 for blue-collar workers; on 14 monthly salaries the former is €1,688 and the latter is €1,415. Managers earn €4,473 net over 13 monthly payments and €4,153 over 14 monthly payments, while executives earn €2,668 and €2,478 respectively.

In the Public Administration, the average gross annual salary is €37,073 (Source: Aran elaborations on RGS – IGOP data, data for 2020 updated to 19/12/2022).

Monthly salary with 13 annual payments

Type of workGrossNet
Directors7.955€4.473€
Managers4.279€2.668€
employee2.475€1.818€
factory worker1.963€1.524€

Monthly salary with 14 annual payments

Type of workGrossNet
Directors7.387€4.153€
Managers3.974€2.478€
employee2.298€1.688€
factory worker1.823€1.415€

Professions that earn the most in Italy

The highest paying sectors and professions in Italy are those in which workers are highly skilled. At the top of the list of highest salaries are banking and financial services, followed by engineering, pharmaceuticals and biotechnology. In general, the lowest salaries are characteristic of sectors that require less specialization such as personal services, hotels and restaurants.

SectorAverage RAL (€)Average RGA  (€)
Bank and finance46.35448.928
engineering40.37241.267
Pharmaceuticals and Biotechnology39.20941.152
Telecommunications37.92539.719
Insurance37.90042.214
Oil & Gas37.80038.941
IT and Software Consulting Services37.23338.743
Air Force35.97937.661
Chemistry34.77835.960
Electronic and Electrical Equipment, Automation33.32934.246

Average salary in Italy by age

The one between age and wages is a well-defined economic relationship: wages increase as age increases, although over time the growth diminishes. As you gain experience and advance in your career, you earn more, but the wage increase you get overtime at some point becomes smaller and smaller.

AgeRAL (Gross annual salary)RGA (Total annual income)
15-24 year old24.588€24.690€
25-34 years old27.028€27.376€
35-44 years old29.831€30.348€
45-54 years old31.926€32.589€
55-64 years old34.057€34.810€

Italian Cities and regions where people earn more (and less)

There is a 17 percent difference in salaries between the North and South.

The first region with higher average salaries is Lombardy (average RGA €32,191), followed by Trentino Alto Adige (€31,501) and Lazio (€31,016).

The regions that pay workers the worst are Sicily, Calabria and Basilicata, where annual salaries range between €26,205 and €25,317.

The provinces with the highest salaries are Milan, Trieste, Bolzano, Rome, Genoa, Parma, Turin, Monza Brianza, Varese and Bologna. Last are Matera, Nuoro, Sassari, Crotone and Ragusa.

More data on salaries in Italy

Salaries increase with company size. In micro enterprises (up to 10 employees) an office worker earns an average of €29,971, a middle manager €50,859, and a factory worker €24,337, while in a medium to large company (250 to 1,000 employees) average annual salaries are €61,310 for middle managers, €36,205 for office workers, and €27,773 for factory workers.Source: JP Salary Outlook, JobPricing Observator.

Salaries are still influenced by gender. Unfortunately, gender is an individual factor that still determines significant differences in salaries: women participate less in working life, work fewer hours than men, have less stable contracts, and are not equally present between the base and the top of organizations. All of this translates into a wage gap unfavorable to women compared to men, the so-called gender pay gap. In Italy the gender pay gap is strongly influenced by the sector in which one works: in the public sector it is 4.1 percent, among the lowest in Europe, while in the private sector it is among the highest (16.5 percent).

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