Three-year deal breaks mould in Italy

Italian banks and the country’s finance-sector unions have signed an agreement worth a total of 11.5% over three years.

Running until December 2010, the settlement includes a 4.7% pay increase to cover the forecast level of inflation over the three years – 1.7% in 2008 and 1.5% in both 2009 and 2010. There is also a 3.8% increase to reflect the fact that past inflation was higher than expected; paid as a lump sum, this will be worth €1,600 for mid-ranking employees. And an additional 3.0% increase in anticipation of productivity improvements. The latest official figures show that inflation in Italy was running at 2.6% last month.

The usual pattern for Italian settlements is for the procedural elements to last for four years and the financial elements for two. But the banking industry deal, which covers 330,000 employees, will not be the last to break with tradition – it has already been agreed that the next settlement in the public sector will also run for three years, although its details have still to be settled.