A New Method of Indexing Wages in Italy

ABSTRACT: Wage indexing, which has been in operation in Italy since 1946, never gave rise to any perplexities for a long time, until the innovations introduced in 1975. At this point, numerous criticisms were raised by both politicians and economists, and following this, the system was modified, starting from 1986. In this article the author illustrates these modifications and redimensions the criticisms which he retains excessive. It was only during its first years of being applied, between 1976 and 1978, that there was a high level of indexation, and then it subsequently decreased. After various resistances and contestations, the decision to reduce the degree of indexation was also accepted by the trade unions, and thus it was possible to attenuate the inflation expectations, and bring inflation under control.