Universität Konstanz Rechts-, Wirtschafts-, und Verwaltungswissenschaftliche Sektion Fachbereich Politik- und Verwaltungswissenschaft Magisterarbeit to reach the degree in Political Science SUCCESS AND FAILURE IN PUBLIC PENSION REFORM: THE ITALIAN EXPERIENCE Supervised by: Prof. Dr. Ellen Immergut, Humboldt-Universität PD Dr. Philip Manow, Max-Planck Institut für Gesellschaftsforschung Presented by: Anika Rasner Rheingasse 7 78462 Konstanz Telephon: 07531/691104 Matrikelnummer: 01/428253 8. Fachsemester Konstanz, 20. November 2002 Table of Contents 1. Introduction ..................................................................................................................................... 1 1.1. The Puzzle ............................................................................................................................... 1 2. Theoretical Framework ................................................................................................................... 3 2.1. Special Characteristics of the Italian Political System during the First Republic ................... 3 2.1.1. The Post-War Party System and its Effects..................................................................... 4 2.2. The Transition from the First to the Second Republic ............................................................ 7 2.2.1. Tangentopoli (Bribe City) ............................................................................................... 7 2.2.2. The Restructuring of the Old-Party System .................................................................... 8 2.2.3. The Reform of the Electoral Rules.................................................................................. 9 2.3. The Theories about Pension Politics ..................................................................................... 11 2.3.1. Problem Pressure: the Impact of Demographic and Economic Variables..................... 12 2.3.2. The Impact of Social Pacts............................................................................................ 15 2.3.3. Institutions and Pension Politics.................................................................................... 17 2.3.4. The Impact of Party Competition.................................................................................. 19 2.4. Hypotheses ............................................................................................................................ 23 3. The Italian Political System: A General Overview ....................................................................... 24 3.1. The Institutional Structure of the Italian System................................................................... 24 3.2. The Legislative Process......................................................................................................... 25 4. The Evolution of the Italian Welfare State.................................................................................... 28 4.1. The Origins of Social Welfare in Italy .................................................................................. 28 4.2. The Italian Welfare State in the Beginning of the 20th Century ............................................ 29 4.3. The Development after the Second World War .................................................................... 30 5. The Case Study – Part 1: The Gridlock of the First Republic....................................................... 32 5.1. The Last Decade of the First Republic: An Overview .......................................................... 32 5.1.1. The Scotti Proposal - 1980 ............................................................................................ 32 5.1.2. The Commissione Castellino sulla Spesa Previdenziale – 1981................................... 33 5.1.3. The Attempt of De Michelis - 1983 .............................................................................. 33 5.1.4. The Long Debate of the Cristofori Commission – 1984-1987...................................... 34 5.1.5. Next Try – the Formica Project 1988............................................................................ 37 5.1.6. The Attempt of Donat Cattin – 1989............................................................................. 38 5.1.7. The Last Attempt of the First Republic – Franco Marini 1991 ..................................... 38 6. Case Study – Part 2: Italy Awakes Out of its Slumber.................................................................. 40 6.1. The Amato reform: The End of the Gridlock........................................................................ 40 6.1.1. The Budget Law for 1993.............................................................................................. 41 6.1.2. The Legge Delega ......................................................................................................... 41 I 6.1.3. The International Monetary Fund.................................................................................. 46 6.1.4. The Lira under Pressure................................................................................................. 47 6.1.5. The Decreto Legge ........................................................................................................ 47 6.1.6. The legge delega in the Chamber of Deputies .............................................................. 48 6.1.7. The Main Modifications: an Overview ......................................................................... 49 6.2. The Failed Attempt under Berlusconi 1994 .......................................................................... 50 6.3. The Dini Reform in 1995 ...................................................................................................... 52 6.3.1. The Choice for Dini....................................................................................................... 52 6.3.2. The Italian Economy under Pressure............................................................................. 53 6.3.3. Starting over Pension Reform: The Unions’ Proposal .................................................. 54 6.3.4. Reaction of the Government.......................................................................................... 56 6.3.5. The First Reaction of the Confindustria........................................................................ 59 6.3.6. The International Monetary Fund (IMF)....................................................................... 60 6.3.7. The Final Agreement between Government and Unions .............................................. 61 6.3.8. The Legislative Process................................................................................................. 66 6.3.9. The Transmission to the Chamber of Deputies ............................................................. 72 6.3.10. The Transmission to the Commission for Labor in the Senate ..................................... 75 7. How to Explain the Story: Analysis of the Italian Case Study...................................................... 77 7.1.1. Problem Pressure........................................................................................................... 78 7.1.2. The Impact of Social Pacts............................................................................................ 87 7.1.3. Veto Players .................................................................................................................. 90 7.1.4. Change of the Electoral Rules ....................................................................................... 94 7.1.5. Party Configuration and Clientelism............................................................................. 96 8. Conclusion................................................................................................................................... 101 8.1. Results of the Analysis........................................................................................................ 102 8.2. The Outlook......................................................................................................................... 106 9. References ................................................................................................................................... 107 II List of Abbreviations AN Alleanza Nazionale AD Alleanza Democratica CCD Centro Cristiano Democratico CDU Cristiani Democratici Uniti c.f. confer CGIL Confederazione Generale Italiana del Lavoro (union) CISL Confederazione Italiana dei Sindacati (union) Confindustria Italian employers’ association CS Cristiani Sociali DC Democrazia Cristiana DN Destra Nazionale DP Democrazia Proletaria ECJ European Court of Justice EU European Union FDS Federazione liberal-socialista Unione dei Democratici e dei Socialisti FI Forza Italia FPLD Fondo Pensioni Lavoratori Dipendenti (National Pension Fund) GDP Gross Domestic Product INPDAI Istituto Nazionale per i Dirigenti di Aziende Industriali (National Social Insurance Institute for Entrepreneurs) INPGI Istituto Nazionale Previdenza Giornalisti Italiani (National Social Insurance Institute for Journalists) INPS Istituto Nazionale di Previdenza Sociale (National Social Insurance Institute) LN Lega Nord MSI Movimento Sociale Italiano PAYG Pay-As-You-Go PCI Partito Comunista Italiano PDS Partito Democratico della Sinistra PLI Partito Liberale Italiano PPI Partito Popolare Italiano PR Proportional Representation PRI Partito Repubblicano Italiano PSDI Partito Socialista Democratico della Sinistra