Some initial impressions about two extremely different labour markets I had the chance to work within. More to follow.
This article will go over some aspects I found particularly interesting and relevant in defining the differences existing between the UK and the italian labour markets, seen from the point of view of an entry-level employee.
Key points:
- Why is it so difficult to enter the italian labour market in comparison with the UK?
- What kind of salary differences can exist between Italy and the UK?
- What return of investment has education got in Italy and in the UK in terms of remuneration?
Outsiders and insiders
To answer the first question, I would like to recall a particular feature of the italian labour market, such as the deep cleavage between those who have entered the labour market and those who are still trying to do so. The first section of workforce is often referred to as insiders, while those who have not entered the market yet can be named outsiders.
In Italy, due to the actual legislation, the gap between the two segments of the workforce is extremely deep, hence insiders are guaranteed a secure and well-protected employment contract. On the other hand, outsiders spend several years struggling to replace insiders. As a consequence, there is very little room for any workforce turnover as well as generational change.
This also affects, in my opinion, the poor match between the skills required by labour demand and those offered by labour supply, because employers are not free to replace their employees following the skills and competences they can or cannot provide.
In the UK, it is way easier to recruit who one really needs because one simply does not need to keep employees regardless of their expertise and competences.
SALARY AND CAREER PROGRESSION
Now, this point can be extremely controversial. From what I saw, there’s no huge spread between the UK and Italy. True, I lived in Scotland, which is somehow considered kind of a periphery in the UK, clearly by Englishmen. In addition to that, one should consider the different cost of living, even if – once again – I witnessed no huge gap between Scotland and Italy, or northern Italy at least. Obviously, if you compare Scotland to southern italian regions, price may be twice as usual.
Still, I appreciated the ease with which you can find a job and earn a decent salary in a short time. Also, entry-level salaries in the UK are normally higher than in Italy. That’s no surprise though, considering the fact that italian employers are allowed to offer much less to unexperienced employees, since there the job alone is already considered an asset of great value.
Apart from that, I think in Italy you need to consider the fact that you have become an insider as part of your remunaration: guarantees of a stable job, together with a safe and clear career progression and strong welfare state measures, add much value to italian salaries.
THE ROI OF EDUCATION IN ITALY AND IN THE UK
This is probably one of the most important features of the divide between the two labour markets.
Not to go too much deep into detail, I will recall the labour market theory of signals: according to this theory some signals, such as the possesion of a degree, indicate the worth of workers, making them earn more money. The fact is, italian universities tend to develop advanced students rather than skilled employees. As a consequence, Italians may want to graduate not to develop certain skills and competences, but to take advantage of what is referred to as “sheepskin effect”. Thus, employers do not put any great value on degrees, simply because they know they will need to invest a certain amount of time training their new employees.
On the contrary, the UK educational system, in my humble opinion, is rather shaped in accordance to the skills looked for by labour demand. In such a situation, investing money in education often pays its reward.
SOME FINAL CONSIDERATIONS
In the UK: easier to get a job and a decent salary even if not experienced, fewer safeguards, better ROI for education.
In Italy: more safeguards, lucky if you have got a job, struggling if you are looking for one, clear career progression, not valuable ROI for education.
Kepler HR 