Italy Post Office May Depend on Nepotism to Cut Workforce

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Italy Post Office May Depend on Nepotism to Cut Workforce Costs

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Sept. 22 (Bloomberg) -- Italy’s postal service, the country’s biggest employer, has proposed an innovative way to cut costs and usher out older workers: nepotism.

Under a draft plan detailed to unions, postal workers at 140 branches who agree to early retirement can cede permanent job contracts to their children. The “heir” must be at least 30 years old with a high school diploma. Talks on the policy are at an “advanced stage,” and it could be implemented by early October, said Walter de Candiziis, head of Failp-Cisal, the union that first suggested the plan in 1997.

Italy is mired in its worst recession since World War II, and unemployment may swell to more than 10 percent this year, the highest in almost a decade, the Organization for Economic Cooperation and Development estimates. Italy’s youth unemployment rate has soared to 26 percent, 20 points higher than the average for the 30 nations of the OECD.

Under the new proposal, postal workers can deliver job security to their kids, at a time when most Italian companies are shying away from offering such jobs for life. For employers, the permanent contracts are difficult to break when staff cuts are needed and they require more generous social-security contributions that increase as the worker ages.

Pressure on Costs

“There is pressure on personnel costs and that will get management thinking of ways to cut back in a difficult economic climate,” Myriam Fernandez De Heredia, an analyst at Standard & Poor’s in Madrid, said in a telephone interview.

Poste Italiane, created in 1860 after the unification of Italy, had revenue of 17.9 billion euros ($26.4 billion) last year, according to its annual report. Poste employs 155,732 workers, about twice as many as Fiat SpA, Italy’s biggest manufacturer, has in the country. Personnel costs alone total 5.9 billion euros a year, according to Fernandez De Heredia.

Nepotism has deep roots in Italy. The word derives from the Latin for nephew and has its origins in the practice of popes elevating their nephews to the position of cardinal to create papal dynasties.

The Poste plan comes at a time when the government is trying to break with that history and promote meritocracy in the public administration to boost Italy’s declining productiveness. Italy ranked 48th in the World Economic Forum’s 2009 global competitiveness ranking, trailing countries such as Estonia, Thailand and Barbados.

‘Worst of Italy’

Public Administration Minister Renato Brunetta is trying to slash 40 billion euros in government spending over five years by forcing out civil servants who don’t fulfill productivity targets.

“I will fight against the worst of Italy,” Brunetta said Sept. 11. “The Italy of cunning, the Italy of nepotism, the dirty Italy.”

Five of six unions representing postal workers back the jobs-for-kids plan, which is subject to approval by the postal service’s board, officials say. About 1,500 Poste workers would be eligible, said De Candiziis, secretary general of the Failp- Cisal union, which first proposed the idea.

“We thought it would good to have a change of guard and bring new people in,” De Candiziis said in a telephone interview. “The company informed us verbally they were moving forward. It could happen by early October.”

The postal service confirmed that the plan is being considered, without giving more details.

To qualify, a retiring worker would have to be at least 58 years old and have made 35 years of pension contributions. Candidates looking to take their parents’ place at the post office would be subject to a job interview.

The Finance Ministry holds 65 percent of Poste and Cassa Depositi & Prestiti, the government’s lending arm, owns the rest. Italian governments have periodically floated the idea of privatizing the post office to raise cash to trim Europe’s biggest debt.