2000/128/EC: Commission Decision of 11 May 1999 concerning aid granted by Italy to promote employment (Notified under document number C(1999) 1364) (Text with EEA relevance) (Only the Italian text is authentic)
Date: 1999-05-11
Institutions: European Commission
Subjects: Italy, State aid, employment aid, employment statistics, vocational training, work contract

15.2.2000

EN

Official Journal of the European Communities

L 42/1

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 11 May 1999

concerning aid granted by Italy to promote employment

(Notified under document number C(1999) 1364)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2000/128/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community, and in particular the first subparagraph of Article
88(2) thereof,

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

information by letter No 52270 of 4 June 1997, to
which the Italian authorities replied by letter dated 11
September 1997 from the Prime Minister’s Office and
letter No 7224 dated 28 October 1997 from the
Permanent Representative’s Office.
the
information received, the investigation was extended to
other aid schemes connected with this package,
i.e.
Laws Nos 863/84, 407/90, 169/91 and 451/94, which
govern training and work experience contracts. As the
aid they provide for has already been granted, the laws
in question were entered in the register of non-notified
aid under NN 164/97.

Following

Having given interested parties notice
comments
the
provisions (1) and having regard to those comments,

accordance with

in

to submit

their
abovementioned

Whereas:

I. PROCEDURE

(1) By letter No 3081 dated 7 May 1997 from the
Permanent Representative’s Office, the Italian authorities
in accordance with Article
notified the Commission,
88(3) of the EC Treaty (formerly Article 93(3)), of a
draft law subsequently approved by Parliament (Law No
196 of 24 June 1997) concerning measures to promote
employment (2). As it concerned a plan to grant aid, the
law was entered in the register of notified aid
draft
under N 338/97. The Commission requested further

(1) OJ C 384, 10.12.1998, p. 11.
(2) Official Journal of the Italian Republic No 154, 4 June 1997.

(2)

Investigation of
the case was pursued by further
Exchanges of Letters and meetings. The Commission
sent letters Nos 55050 of 6 November 1997 and 51980
of 11 May 1998; the Italian authorities sent letters Nos
2476 of 10 April 1998 and 3656 of 5 June 1998.
Meetings were held in Rome on 27 November 1997, 3
March 1998 and 8 April 1998.

(3) By letter of 17 August 1998, the Commission informed
the Italian Government of its decision to initiate the
procedure under Article 88(2) of
the EC Treaty
(formerly Article 93(2)) in respect of aid granted since
through
November 1995 to promote
employment
fixed-term training and work experience
contracts
provided for in Laws Nos 863/84, 407/90, 169/91 and
451/94. The Italian Government was also informed in
the same letter of the decision to initiate the Article
88(2) procedure in respect of aid for converting training
and work
open-ended
contracts under Article 15 of Law No 196/97.

experience

contracts

into

L 42/2

EN

Official Journal of the European Communities

15.2.2000

(4) The Commission Decision initiating the procedure was
the European
published in the Official
Communities (3). The Commission invited interested
parties to comment on the measures in question.

Journal

of

employees
to 32, and by Law No 451/94, which
introduced the one-year training and work experience
contract and set a compulsory minimum number of
training hours.

(5) The Italian Government set out its comments in a letter
dated 4 November 1998. The Commission requested
further details by letter of 1 February 1999, to which
the Italian Government replied by letter dated 5 March
1999.

(10) Under these laws,

the training and work experience
contract is a fixed-term contract for the employment of
young people aged between 16 and 32. The age limit
regional
may be
authorities. There are two types of training and work
experience contract:

the discretion of

raised at

the

(6) The Commission received comments from the Italian
General Confederation of Industry (Confindustria) in a
letter of 11 January 1999 and forwarded them by letter
of 21 January 1999 to the Italian Government for its
response.

(cid:151) the first type concerns activities requiring a high
level of
training. The contract has a maximum
duration of 24 months and must provide for at least
80 to 130 hours of training to be given at
the
workplace for the full period of the contract,

(7) By letter dated 1 February 1999, the Commission also
invited Confindustria to provide further details and
these were provided by letter of 22
information;
February 1999. The most
information from
Confindustria was sent by letter of 31 March 1999 (4).

recent

II. ITALIAN LEGAL BASIS FOR THE AID

II.1. Training and work experience contracts

(8) The

training

experience

and work

contract was
introduced in 1984 by Law No 863/84. This was a
fixed-term contract, including a training period, for the
employment of unemployed persons of up to 29 years
from paying social
of age. Employers were exempt
security contributions
in respect of
persons employed under this type of contract. The
reduction was applied in a generalised, automatic,
indiscriminate and uniform manner
the
country.

throughout

two years

for

(9) The implementation arrangements

type of
contract were changed in 1990 by Law No 407/90,
which introduced a regional variation in the aid, by Law
No 169/91, which raised the maximum age of eligible

this

for

(cid:151) the second type must last no more than 12 months

and include 20 hours of training.

(11) The main feature of the training and work experience
contract is that it provides the employee with a training
programme conferring a specific qualification. Training
programmes are usually drawn up by consortia of firms
or trade associations and approved by the employment
office, which checks whether, at the end of the training
period, the employee has actually received the training
required.

(12) Employers who take people on via training and work
experience contracts benefit from reductions in social
security contributions. The reductions allowed for the
period of the contract are:

(cid:151) 25 % of contributions normally due,

for
located in areas other than the Mezzogiorno,

firms

(cid:151) 40 % for

firms

in the commercial and tourism
sector, with fewer than 15 employees, established in
areas other than the Mezzogiorno,

(cid:151) total exemption for craft firms and firms in areas
is above the

where the level of unemployment
national average.

(3) See footnote 1.
(4) The information consists solely of official statistics published by the
Istituto Nazionale di Statistica (ISTA) (cid:145)Forze di lavoro media 1997(cid:146)
and (cid:145)Formazione universitaria e mercata del
lavora(cid:146) and by the
Organisation for Economic Cooperation and Development ((cid:145)Uno
sguardo sull’educazione(cid:146), 1997). The
statistics provided by
Confindustria consist solely of those data reproduced in the form
of graphs.

(13)

In order to qualify for these reductions, the employer
must not have reduced staff numbers in the previous 12
months, except where he is taking on employees with a
different qualification. The employer must also have
kept on (with an open-ended contract) at least 60 % of
employees whose training and work experience contract
expired in the previous 24 months.

15.2.2000

EN

Official Journal of the European Communities

L 42/3

(14) For

training and work experience contracts of

the
reductions are also
second type (lasting one year),
subject to the condition that the contract be converted
into an open-ended contract. The reductions apply only
after conversion and for a period equal to the period
covered by the training and work experience contract.

(15) The Italian authorities maintain that

this is an aid
scheme to promote youth employment. In their view,
the Italian market has particular features which make it
necessary to increase to 32 the age limit of 25 usually
applied for this category.

(16)

In its Decision initiating the Article 88(2) procedure in
respect of the measures in question, the Commission
took the view that
the aid to employment under
training and work experience contracts clearly has the
following features:

(cid:151) it does not necessarily concern the recruitment of
workers who have not yet obtained employment or
who have lost
their previous job, as this is not
required by Italian law,

(cid:151) it does not contribute to the net creation of new
jobs within the meaning of the guidelines on aid to
employment (5)
since there is no obligation to
increase
ban on
the workforce,
redundancies in the preceding period,

despite

the

(cid:151) it does not encourage firms to take on certain
groups of workers experiencing difficulties entering
or re-entering the labour market. Given the very
high age limit (32), which can be raised even further
by the regional authorities, the aid is not aimed at
young people as the Italian authorities claim.

II.2. Conversion of training and work experience

contracts into open-ended contracts

(17) Article 15 of Law No 196/97 stipulates that firms in
Objective 1 areas which, on expiry, convert training and
work experience contracts of the first type (two years)
into open-ended contracts enjoy exemption from social
security contributions for a further year. They must
return any aid received if they dismiss the employee
within 12 months of the end of the assisted period.

(5) OJ C 334, 12.12.1995, p. 4.

(18) The Commission noted when initiating the procedure
that the aid does not appear to meet all the conditions
laid down by the Community guidelines on aid to
employment. The Commission is
thus obliged to
conclude that the aid is for maintaining jobs and, as
stipulated in the Community guidelines in question,
such aid constitutes operating aid.

III. COMMENTS FROM OTHER INTERESTED PARTIES

(19) The other interested parties which submitted comments

are represented by Confindustria.

III.1. Training and work experience contracts

(20) Confindustria noted that the aid scheme in question has
not changed substantially as a result of the series of
amendments, and it remains generally applicable. It was
simply a question of adjusting to the scale of
the
introduced by
problems
involved. The amendments
Laws Nos 169/91 and 451/94 have not,
it claimed,
altered the (cid:145)general and uniform(cid:146) nature of the scheme
in the sense that the measures are applicable irrespective
of the sector and geographical area concerned. Nor has
the
the
measures been altered, as they continue to be objective
and non-discretionary with regard to the eligibility of
the recipients of the aid concerned.

and (cid:145)indiscriminate(cid:146) nature of

(cid:145)automatic(cid:146)

(21) The only measure which could alter the general nature
of the scheme would be Law No 407/90, which gives
some firms larger reductions according to their location.
The effects of the amendment would be limited to the
loss of uniformity of the scheme as the other factors
remain unchanged.

to

owing

unequal

the regional
According to Confindustria, removal of
the
variations, which would obviate the need for
measure
of
distribution
the
unemployment in the different regions of Italy, should
the file for non-applicability of
result
Article 87 of
the
the EC Treaty. As
Commission’s examination should essentially focus on
this aspect of
the new rules on training and work
experience contracts.

in closure of

result,

a

Confindustria therefore shares the Commission’s view
that the aid is constituted by the differential part (cid:151)
with regard to the general 25 % reduction in social

L 42/4

EN

Official Journal of the European Communities

15.2.2000

security contributions applicable throughout the country
(cid:151) of the reduction in contributions for firms operating
in certain regions.

age group is, furthermore, identical to that of the 25 to
the need to provide
justifies
29 age group:
employment aid for the entire 25 to 32 age group.

this

(22) The different

level of assistance by size of

firm is,
according to Confindustria, due to the greater financial
weakness of some firms compared with others and to
the fact that those firms make proportionally the largest
contribution to new job creation. Such parameters are
not being sufficient, according to Confindustria,
to
conclude that the successive legislative provisions confer
sectoral selectivity on such aid within the meaning of
inasmuch as all sectors
Article 87(1) of
engaged in productive activity benefit from the same
treatment. The more favourable treatment of service
industries is, it is claimed, granted according to the type
of employment and does not confer advantages on
some firms in relation to their competitors.

the Treaty,

(23) According to Confindustria, aid that varies according to
size of firm is, moreover, compatible in every case with
the intensities provided for in the Community guidelines
on State aid for small and medium-sized enterprises (6).

(24) Confindustria also states that it would not be possible to
separate the three elements referred to in points 12.1
the Commission letter of 17 August
and 12.3 of
1998 (7)
various
some
characteristics necessarily overlap. It would not be easy
in practice to establish when unemployed persons were
recruited or even to distinguish between that condition
and the net creation of jobs.

because,

extent,

the

to

(25) Nor,

that

is
training

according
for

to Confindustria,
stating

there
any
justification
and work
experience contracts are not aimed at the net creation
of jobs as the law does not provide for the obligation to
increase the workforce. Such a claim must not diminish
the importance of objective monitoring of the Italian
labour market, where training and work experience
contracts constitute an essential instrument.

(26) As

for

the

age

regards

persons(cid:146)
(cid:145)young
limit
Confindustria notes that
it cannot be uniform in all
countries. Eurostat data on employment in Europe in
1995 not only support that claim but also show that, in
the age group challenged by the Commission, Italy has
a higher unemployment rate than the European average.
The number of unemployed persons in the 29 to 32

(6) OJ C 213, 23.7.1996, p. 4.
(7) See footnote 1.

Table 1

Unemployment in Europe by age group (cid:151) 1995

(from data supplied by Confindustria)

Age group

Europe
(EU 15 average)

20 to 24

25 to 29

30 to 34

Source: Eurostat.

20,8

13,4

10,1

Italy

31,7

17,7

10,9

(27) Confindustria also compared the 15 to 29 age group
with the 25 to 34 group: it states that, whilst there is a
significant gap in the regions of northern Italy between
the unemployment rate in the 15 to 24 age group
(49,7 %) and that in the 25 to 34 group (40,4 %), the
difference is much smaller in the regions of southern
Italy, where unemployment is 45 % for those aged 15 to
24 and 45,5 % for those aged 25 to 34. It concludes
that unemployment in southern Italy remains high even
after the age of 25.

Table 2

Jobseekers aged 15 to 39 (cid:151) percentages by age group and
geographical distribution

(April 1995)

15 to 19 20 to 24 25 to 29 30 to 34 35 to 39

13,0

36,7

26,0

14,4

10,0

10,4

37,0

26,0

16,7

12,3

32,7

28,6

16,9

12,1

34,5

27,5

16,2

9,9

9,5

9,7

North

Central

South

Italy

Source: ISTAT.

(28) As regards young persons with a university degree (25
to 34 group), the difference between unemployment in
Italy and the EU average is even greater: compared with
an EU average of 8,9 %, unemployment among young
graduates in Italy is 20,4 %.

15.2.2000

EN

Official Journal of the European Communities

L 42/5

Table 3

since the number of unemployed between 25 and 32 is
the same as those under 25.

Unemployment in Europe in the 25 to 34 age group by
level of education (cid:151) 1995

Table 4

(from data supplied by Confindustria)

Level of education

EU 15 average

University graduates

Secondary school leavers

Students completing
compulsory education

Source: Eurostat.

8,9

9,6

17,2

Italy

20,4

12,8

14,6

(29) Confindustria

comments

that youth unemployment
affects a very wide age range and especially those who,
even if they have a university degree, have difficulties in
obtaining stable employment on the labour market. This
is particularly true in the Mezzogiorno, where the age
limit of 25 appears to be too restrictive.

inexplicable.

(30) The training and work experience contracts are intended
to provide the technical and theoretical know-how to
allow the workers to find employment on the labour
market. The lack of flexibility in the application of the
guidelines as regards the definition of (cid:145)young persons(cid:146)
seems
the
Commission’s reasoning, which defines the training and
work experience contracts as operating aid. It underlines
the lack of correlation between the (possible) exclusion
of some beneficiaries (those over 25) from the (cid:145)young
persons(cid:146) category and the fact that training and work
intended
serving their
experience contracts are not
purpose and therefore constitute operating aid.

Confindustria

challenges

(31) Confindustria also states that certain sociological studies
show that young persons aged 29 to 32 face specific
problems in obtaining employment, with employers
usually preferring, all qualifications being equal,
to
recruit younger candidates. The difficulty for them in
both cases is to find their first
in Italy, young
university graduates seeking employment are often aged
over 25. University studies are completed on average at
the age of 23 to 25, and men still have their military
statistics provided by
service
Confindustria show that 75 % of
Italian students are
over 25 when they graduate from university, whilst
26,8 % is the median age for 50 % of graduates.

to carry out. The

job:

(32) The

statistics on the

finding
employment indicate, according to Confindustria, that
youth unemployment is not limited to those under 25,

average

spent

time

Distribution by age of university graduates ((cid:145)laureati(cid:146) in
Italy) (1995)

(from data supplied by Confindustria

Country

Age in
the first
quartile

Median
age

Age in
the third
quartile

Usual age

Austria

25,6

27,3

29,6

22 to 25

Belgium
(Flemish
Community)

Denmark

Finland

Iceland

Italy

Netherlands

New Zealand

Norway

Spain

Sweden

Source: OECD.

20,5

26,5

26,1

24,7

25,5

23,8

21,7

23,8

23,9

25,3

22,0

28,2

27,6

26,0

26,8

25,3

22,7

25,2

25,3

26,3

23,3

30,5

29,9

28,0

28,7

28,0

24,7

27,5

41,0

29,4

22 to 24

25 to 27

25 to 26

25,0

23,0

23,0

23,0

24,0

23,0

23 to 24

employment

increased with age. This

(33) Confindustria also stated that the average time spent
finding
is
particularly true of graduates, who on average remain
unemployed for 14 months in the 15 to 24 age group,
20 months in the 25 to 29 age group and 37 months
in the 30 to 39 age group. As regards the total number
of jobseekers, unemployment lasts 24 months for the
15 to 24 age group. The period of unemployment rises
to 36 months in the 25 to 29 age group and to 37
months in the 30 to 39 age group.

Table 5

Jobseekers by age group and length of unemployment (cid:151)
average for 1997

(from data supplied by Confindustria)

1 000

Period of unemployment

Age group
15 to 24

Age group
25 to 29

Less than 1 month

2 to 3 months

55

79

27

39

L 42/6

EN

Official Journal of the European Communities

15.2.2000

Period of unemployment

Age group
15 to 24

Age group
25 to 29

4 to 5 months

6 to 11 months

12 to 13 months

24 months and over

Information not available

51

146

245

432

19

Total

1 038

Source: ISTAT.

33

69

116

353

14

652

Table 6

Average number of months spent seeking work per
person (1997)

(from data supplied by Confindustria)

Age group

University
graduates

15 to 24

25 to 29

30 to 39

40 to 49

50 and over

Source: ISTAT.

14

20

37

34

30

Total

24

36

37

34

32

(34) The

data

supplied

employment

by Confindustria

concerning
university graduates in 1992 show that, three years after
gaining their diplomas, over 50 % had not yet found
stable
seeking
still
those under 24 and
employment and that 93 % of
45,7 % of those between 25 and 34 lived with their
parents. According to Confindustria,
this is because
being jobless acts as a barrier to independence for
young people over the age of 25.

and 23 % were

(35) As regards the selectivity of the measures in question,
Confindustria considers that
the contradiction in the
Commission’s reasoning on the non-applicability of the
regional exemptions. If the Commission considers that
the aid consists of the additional aid for training and
in
work experience
less-favoured regions, it cannot deny that the measure
qualifies for regional exemption on the ground of its
general nature. The Commission’s finding that the aid is
constituted by the regional-specificity differential as
compared with the general measure is not consistent

concluded by firms

contracts

with its statement (8) that the aid is not restricted to the
areas eligible for derogation as it applies to the country
as a whole. Examination of the derogations provided for
in the Treaty should therefore be carried out with
regard to this part of the benefit.

(36) Confindustria also states that the Commission has not
given sufficient reasons for its finding that the measures
to overcome the structural handicaps of less-developed
regions are inadequate. If the view is that the aid should
be examined under Article 87(3) and not under the
guidelines on aid to employment, Confindustria points
out that there is no reason why the aid, which is tied to
and
a
is
commensurate with the seriousness of
the structural
problems, should not qualify for exemption.

training programme

vocational

costly

(37) According to Confindustria, the employer’s commitment
to provide training acts as a counterpart
to the aid
granted (9).
It represents a contribution which is not
related to the initial investment but takes the form of
financial and organisational efforts to set up the training
courses. The employment aid guidelines provide that aid
must be accompanied by training or retraining of the
worker concerned.

(38) According

20

are

there

to Confindustria,

insufficient
grounds for the Commission’s doubts when it states that
(cid:145)the aid does not qualify for the regional derogations
under Article 87(3)(a) and (c), as it is not investment
aid(cid:146). Since this provision is given as the legal basis in
point
guidelines,
Confindustria does not understand why the measures in
question do not qualify for exemption simply because
they do not consist of investment aid. In the present
investment would be replaced by a
case,
budgetary and organisational
commitment by the
employer.

employment

the initial

the

aid

of

III.2. Aid for the conversion of training and work
experience contracts into open-ended
contracts

(39) Confindustria disputes

the
the
conversion of training and work experience contracts
into open-ended contracts constitutes operating aid. As

aid for

that

fact

(8) Point 12.6 of
footnote 1).

the Commission letter of 17 August 1998 (see

(9) In support of this argument, Confindustria refers to the judgment
of the Court of Justice in Case 730/79, Philip Morris v Commission
[1980] ECR 2671.

15.2.2000

EN

Official Journal of the European Communities

L 42/7

to the reasoning,
regarding such contracts (see recitals 20 to 38).

to the comments made

refers

it

IV. COMMENTS FROM THE ITALIAN AUTHORITIES

IV.1. Training and work experience contracts

the most

and encourage

(40) According to the Italian authorities, training and work
experience contracts are one of
important
instruments providing access to the labour market and
an essential part of the Government’s efforts to combat
unemployment
employment of
persons aged between 16 and 32. They are particularly
useful
is
especially severe. The Italian authorities pointed out that
training and work experience contracts are aimed at
fostering the entry or re-entry into the labour market of
those who, because of their age or for other reasons,
experience difficulties in obtaining employment.

in southern Italy, where unemployment

the

(41) As

that

regards

the 16 to 25 age group,

the Italian
authorities do not consider
in
question give rise to any problems of incompatibility
with the Treaty as that age group should be regarded as
an underprivileged category. Accordingly, there is no
need to comply with the net job creation requirement
over a given period.

the measures

that

(42) The Italian authorities also justify the application of the
measures in question to the 26 to 32 age group on the
ground
category
experiencing specific difficulties: persons in that age
group have either been unemployed for a long time or
can be treated in the same way as those under 26
because of the special employment situation in Italy.

constitutes

latter

the

a

(43)

In support of their arguments,
the Italian authorities
stress that, according to the statistics for the period
1994 to 1996, 34,3 % of those aged 25 to 32 were
registered as unemployed in 1994, 33,1 % in 1995 and

the percentages of persons

32,8 % in 1996. In the Mezzogiorno the percentages are
higher (39 %), 37 % and 36,4 %). On the basis of these
statistics,
registered as
unemployed (liste di collacamento) in the 19 to 24 age
group are lower than those in the 25 to 32 age group
(31,7 %, 31,1 % and 30,8 % in these same years). The
Italian authorities forwarded the data for the 25 to 32
age group (Table 7) by letter of 5 March 1999.

Table 7

Percentages of persons aged 25 to 32 registered as
unemployed (liste di collocamento)

(data supplied by the Italian authorities)

1994

1995

1996

Italy

34,3

33,1

32,8

Mezzogiorno

39

37

36,4

Source: Provincial Employment Office.

(44) The Italian authorities also pointed out

the labour market entry age meant

that young
university graduates reached the labour market at a
relatively advanced age (27 on average) and that they
formed a large proportion of the 30 to 34 age group.
By letter of 5 March 1999, the authorities also specified
that
the age at
which jobseekers find their first job (the labour market
access period is defined as the period between obtaining
a degree and finding employment for the first time). The
Italian authorities also point out that a university degree
does not give access to occupations for which a State
examination is necessary. Of total university graduates,
42,3 % are aged 27 to 34, 4,4 % are aged over 35 and
15,8 % are aged 23 to 24. At the time of the survey,
33 % of
the
Mezzogiorno the corresponding percentage was 46,6 %.

graduates were

not working.

In

Table 8

Age at which university degree (laurea) is awarded (cid:151) 1995

(from data supplied by the Italian authorities)

Age

< 23

24

25

26

27

28

29

30 to 34 35 to 39

> 40

Total

%

4,0

11,8

18,8

18,7

14,3

10,2

6,5

11,3

2,7

1,7

100

Source: ISTAT.

L 42/8

EN

Official Journal of the European Communities

15.2.2000

(45) The Italian authorities also state that unemployment
among graduates in the 25 to 39 age group is 12,4 %,
i.e. higher than unemployment among persons of the
same age but with only a lower secondary school
leaving certificate (10,9 %) or a secondary school leaving
certificate (10,8 %) and with more time to deal with the
problems of finding a first job. According to the Italian
authorities, higher unemployment among graduates is
due essentially to the initial difficulties of gaining entry
to the labour market. The difficulties are even greater in
the south of Italy owing to fewer job opportunities and
a more difficult
to work.
Unemployment rates in those regions for university
lower than those for young
graduates are, however,
leaving certificate
persons with a secondary school
(17,4 % compared with 20,7 %).

transition from school

Table 9

Unemployment rates in the 25 to 39 age group, by type of
study certificate

(from data supplied by the Italian authorities)

First degree (laurea)

Lower secondary leaving
certificate

Higher secondary
leaving certificate

Source: ISTAT.

Italy

Mezzogiorno

12,4

10,9

10,8

17,4

20,7

20,7

(46) The Italian authorities point out that the 25 to 39 age
group faces a particularly long wait before finding
employment, and the data show an increase for the
period 1995 to 1997.

Table 10

Average number of months spent seeking employment,
per person (1997)

(from data supplied by the Italian authorities)

Age group

1995

1996

1997

15 to 24

25 to 29

30 to 39

40 to 49

50 and over

Average

Source: ISTAT.

22

33

33

31

30

28

23

34

36

34

31

30

24

36

37

34

32

32

(47) Other statistics provided by the Italian authorities show
that in southern Italy the time spent by graduates in
finding a job rose from 36,3 months in 1995 to 39
months in 1996 and 44,3 months in 1997, compared
with a national figure of 26,8 months, 27,9 months and
28,3 months respectively.

(48) The Second Report on youth for 1997 published by the
Istituto Nazionale di Statistica (ISTAT) shows that, in the
15 to 24 age group, 65 % of unemployed persons
required more than one year to find employment (the
long-term unemployed), whereas 14 % and 19 % stated
that they had looked for employment for between six
than six months
and for
and 11 months
respectively. According
long-term
to
unemployment affects 46 % of total redundancies and
74 % of those seeking their first job. In the 25 to 34 age
group, the level of long-term unemployment is 78 %,
whilst 15 % of
the unemployed say they have been
looking for employment for less than six months and
In this group,
11 % for between six and 11 months.
the total
long-term unemployment affects 55 % of
number of unemployed who were made redundant and
86 % of persons looking for their first job.

less
those

data,

(49) The Italian authorities also furnished statistics on single
persons in order to identify the number still living with
for
their parents and to strengthen their argument
extending the age limits applied to (cid:145)young people(cid:146). The
statistics show that single persons aged between 15 and
24 accounted for 29,2 % of the population in 1995,
the (cid:145)young people(cid:146) category is
1996 and 1997.
the percentages rise to
extended to the age of 34,
36,6 % (1995), 37,1 % (1996) and 37,4 % (1997).

If

(50) According to a survey conducted by Censis

(32nd
report on the social situation in Italy in 1998), families
are essential
in helping family members to cope with
difficulties encountered in the areas of remuneration and
work. In 1995, 87 % of those aged 20 to 24 still lived
with their parents, whilst, the figure was 56 % in the 25
to 29 age group.

Table 11

Proportion of single persons in the total population

(from data supplied by the Italian authorities)

Age group

˜ 14

15 to 19

20 to 24

1995

15,3

6,7

7,2

1996

15,3

6,7

7,2

1997

15,3

6,7

7,2

15.2.2000

EN

Official Journal of the European Communities

L 42/9

Age group

1995

1996

1997

25 to 29

30 to 34

5,2

2,2

5,5

2,4

5,7

2,5

Source: The Ministry of Labour.

(51) The Italian authorities point out that unemployment in
1995 was very high in the south and in the islands. In
the 25 to 39 age group, it exceeded 50 %, and in the
next age groups it was manifestly higher than in the
north and the centre.

Table 12

Unemployment by age group and area (north, centre,
Mezzogiorno and islands) (1995)

(from data supplied by the Italian authorities)

Area

15 to 19 20 to 24 25 to 29 30 to 34 35 to 39

North

Centre

24,2

34,9

South and islands

56,4

18,1

33,7

55,0

8,9

17,2

34,0

5,2

9,8

4,1

6,4

21,1

13,3

Source: The Ministry of Labour.

(52) The picture

is

similar

in 1996 and 1997, with
unemployment levels higher in southern Italy. Even over
time, the trend reveals differences between the north,
the centre and the south. In the northern regions, the
fall in unemployment is constant for those aged 15 to
19 (24,2 % in 1995 and 22,7 % in 1997) and 20 to 24
(18,1 % in 1995 and 17,3 % in 1997). Central Italy is
characterised by an increase in unemployment in the 25
to 29 age group, whilst in the southern regions the rate
is
group.
Unemployment in the 24 to 29 age group, for example,
rose from 34 % in 1995 to 36,5 % in 1997.

in the 15 to 19 age

lower

only

(53) The Italian authorities also state that

the surveys
published in the Second Report on young people show
that, out of a total of 2 805 000 jobseekers in 1997,
37 % are aged 15 to 24 and 38 % aged 25 to 34.
Overall, 75 % of jobseekers are aged 15 to 34. The most
striking characteristic is that 54 % of those unemployed
and aged 15 to 34 are seeking their first job.

no

significant

(54) The Italian authorities also presented data concerning
unemployment rates by age group, by level of studies
and by area. In the northern and central regions there
are
unemployment
differences
according to the level of qualifications, whereas in the
12,5 %
stronger
south
unemployment among those with a doctorate or a
specialisation, and 34 % among graduates and university
students.

disparities:

there

are

in

Table 13

Unemployment by age group and qualifications in southern Italy (1995)

(data supplied by the Italian authorities)

Age group

Doctorate
or special-
isation

First degree
(laurea)

Shorter first
degree
(laurea breve)

Qualified
for admission
to university

Not qualified
for admission
to university

Secondary
leaving
certificate

Primary
leaving
certificate

15 to 19

20 to 24

25 to 29

30 to 34

35 to 39

Total

0,0

0,0

0,0

0,0

0,0

0,0

0,0

25,0

23,9

7,9

2,5

10,6

0,0

25,0

12,5

6,7

0,0

8,3

44,2

24,5

7,9

3,7

2,5

10,2

25,5

15,3

7,4

4,7

3,5

9,1

20,0

13,9

7,5

5,4

5,1

8,8

22,2

12,0

12,8

9,3

6,9

9,9

Source: The Ministry of Labour.

Total

24,2

18,1

8,9

5,1

4,0

9,5

L 42/10

EN

Official Journal of the European Communities

15.2.2000

(55) The Italian authorities stress that

the unemployment
trend shows an increase in 1995, 1996 and 1997, with
more significant peaks in the centre and the south. The
south
in
unemployment levels according to qualifications.

has more marked

differences

also

as

be

should

viewed

a
firms. Training is not,

(56) They also point out that the training that has to be
provided under
the training and work experience
contracts
compensatory
contribution required of
the
authorities claim,
limited to the minimum number of
hours required by law but
includes apprenticeships.
the vocational
They also note that,
training or retraining aid is not covered by Articles 87
and 88 of the Treaty. Where, however, the measures are
covered by Article 87(1), they are viewed favourably by
the Commission.

in several cases,

(57) The Italian authorities provided data on the calculation
of the cost of training and its effect on the benefits
enjoyed by the employers: on the basis of maximum aid
security
(based on a 100 % reduction in social
contributions)
of
ITL 11 282 256 (EUR 5 826,80), the estimated training
cost is ITL 1 575 000 (EUR 813,42). In addition, there
is the cost of training while on the job.

per worker

year

and

per

(58) The

situation following the

regional
authorities in the maximum age of 32 is as follows: 35
in Lazio, 38 in Calabria, 40 in Campania, Abruzzo and
Sardinia, and 45 in Basilicata, Molise, Apulia and Sicily.

increase by

(59) Lastly,

the Italian authorities stressed the temporary
nature of the aid, which has a maximum duration of
two years.

IV.2. Aid or the conversion of training and work
experience contracts into open-ended
contracts

(60) The Italian authorities state that

the aid scheme is
consistent with the Community guidelines, as they help
to maintain jobs created. The stabilisation of training
and work experience contracts is, they claim, equivalent
jobs since conversion would
too the net creation of
change
into stable ones. Workers
temporary jobs
recruited on training and work experience contracts
would not have to be included among the workforce of
the firm concerned in order to check whether new jobs
had actually been created. The authorities also point out

that, in the absence of such measures, employers would
use other forms of fixed-term contract.

(61) They point out that this interpretation was endorsed by
the Commission when it approved the aid scheme
introduced under Sicilian Regional Law No 30 of 7
August 1997 (10).

V. ASSESSMENT

V.1. Training and work experience contracts

V.1.(a) Assessment of the aid content of the training and

work experience contracts

(62) Training and work experience contracts governed by
Law No 863/84 did not constitute aid within the
meaning of Article 87(1), but a general measure. The
aid was applicable to all firms in a uniform, automatic
and non-discretionary manner and on the basis of
objective criteria.

(63) The amendments made in 1990 by Law No 407/90
modified the nature of
the measures. The new
reductions according to the
provisions varied the
location of the recipient firm and the sector to which it
belonged. This meant that some firms received greater
reductions than those granted to its competitors.

(64) Selective reductions which favour certain firms in a
particular Member State, whether the selectivity operates
level, constitute, for
at individual, regional or sectoral
the differential part of the reduction, State aid within
i.e. aid
the meaning of Article 87(1) of
which distorts competition and could affect
trade
between Member States.

the Treaty,

This differential benefits
in
particular areas of Italy as the aid was not granted to
firms in other areas.

firms which operate

(65) The aid distorts competition in so far as it strengthens
the financial position and opportunities of the recipient
firms with respect to competitors who do not receive

(10) State aid N 692/97.

15.2.2000

EN

Official Journal of the European Communities

L 42/11

aid. Whenever

the
to
this
intra-Community trade, the latter is impaired by the aid.

extends

effect

(66)

In particular, such aid distorts competition and affects
trade between Member States where the recipient firms
export some of their products to other Member States;
equally, even where such firms do not export
their
goods, national production is favoured because firms
established in other Member States have less chance of
exporting their products to the Italian market (11).

(67) For the above reasons, the measures under examination
are normally prohibited under Article 87(1) of the EC
Treaty and Article 62(1) of the EEA Agreement and may
be deemed compatible with the common market only if
they qualify for one of the derogations provided for by
those instruments.

the draft

(68) As to form, the scheme should have been notified to the
Commission at
stage in accordance with
Article 88(3) of the EC Treaty. In the absence of such
the aid is
notification by the Italian Government,
unlawful under Community law on grounds of failure to
comply with Article 88(3) of the Treaty and may be
considered compatible with the common market only if
it qualifies for exemption under the Treaty.

V.1.(b) Compatibility of the training and work experience

contracts

(69) Having concluded that

the measures

in question
constitute State aid within the meaning of Article 87(1)
of the Treaty, the Commission must determine whether
they are compatible with the common market under
Article 87(2) and (3).

(70) With regard to applicability of the derogations provided
for in the Treaty, the Commission takes the view that
the aid does not qualify for the derogations under
Article 87(2) because it
is not aid having a social
character within the meaning of Article 87(2)(a), aid to
make good the damage caused by natural disasters or
exceptional occurrences within the meaning of Article
87(2)(b) or aid that is covered by Article 87(2)(c). Nor
does the aid qualify for the regional derogations under
Article 87(3)(a) and (c) since it is not investment aid.
For obvious
the derogations under Article
87(3)(b) and (d) are not applicable either.

reasons,

(71) The guidelines on aid to employment (12) specify that
favourably disposed

the Commission is normally
towards aid:

(cid:151) for the unemployed,

and

(cid:151) to create new jobs (net creation)
regions eligible for regional aid,

in SMEs and in

or

(cid:151) to encourage firms to take on certain groups of
workers experiencing particular difficulties entering
or re-entering the labour market, at national level; in
job creation,
this case there is no need for net
provided that
following
falls vacant
voluntary departure and not redundancy.

the post

(72) The guidelines also stipulate that the Commission must
make sure that (cid:145)the level of aid does not exceed that
which is necessary to provide an incentive to create
jobs(cid:146) and that the job is a stable one.

(73) The Community guidelines also stipulate

that

the
Commission may also approve aid to maintain jobs
provided that it is limited to areas eligible for exemption
under Article 87(3)(a) and satisfies the conditions laid
down for operating aid. The rules specify that this type
of aid must be limited in time, degressive and designed
to overcome structural handicaps and to promote
lasting development,
in accordance with the rules
governing sensitive sectors.

(74) On the basis of the information obtained in the course
of these proceedings, the Commission considers that aid
for employment under training and work experience
contracts has the following features:

(cid:151) it is not aimed solely at the recruitment of persons
seeking their first
job or still unemployed after
losing their previous job, as this is not required by
Italian law,

(cid:151) it

is not aimed at

the net creation of new jobs
within the meaning of the Community guidelines on
aid to employment (13), even though the firms must
not have dismissed any staff over the preceding
period,

(cid:151) it is aimed at the employment of specific categories
of workers experiencing difficulties entering or

(11) Judgment of 13 July 1988 in Case 102/87 [1988] ECR 4067.

(12) See footnote 5.
(13) See footnote 5.

L 42/12

EN

Official Journal of the European Communities

15.2.2000

it

(32),

re-entering the labour market. In view of the very
is necessary to determine
high age limit
whether the observations of the Italian authorities
and of other
interested parties concerning the
definition of (cid:145)disadvantaged(cid:146) categories are consistent
aid. The
with the guidelines on employment
definition of the age limits for (cid:145)young persons(cid:146)
is
thus essential from the standpoint of compatibility
of the scheme with the common market.

(75) The aid scheme in question is intended to assist workers
aged 16 to 32 who, according to the Italian authorities,
should be regarded as including disadvantaged persons
experiencing difficulties entering or
re-entering the
labour market, either because they fall within the (cid:145)young
persons(cid:146)
long-term
unemployed.

category or because

they

are

(76) The Commission notes

are

The

guidelines

confirmed

the guidelines do not
that
stipulate any age limit for young persons. However, as
already stated when the Article 88(2) procedure was
initiated (14),
the Commission notes that measures to
assist young people at both Community and Member
State level concern young people under the age of
25 (15).
the
International Labour Office, which,
in its report on
employment and young people, defines the latter as
belonging to an age group ranging from 15 to 24 (16).
The report states that
the operational definition of
young people varies considerably from one country to
another, according to cultural and institutional factors.
In industrialised countries and in eastern European
countries with an economy in transition, the lower limit
compulsory
to the
generally
schooling.
is more
limit,
variable (17).

end of
however,

corresponds

upper

The

by

(77) The statistics provided by the Italian authorities and
Confindustria show that unemployment levels in Italy
are high, even after the age of 20 to 24.

(78) Although unemployment is highest in southern Italy, it
jobseekers is
cannot be said that
higher in the 25 to 34 age group than in the 15 to 24
the
age group. The Commission also notes

the percentage of

that

(14) See footnote 1.
(15) Point 12.3 of the Commission letter of 17 August 1998 (see

footnote 1).

(16) International Labour Office Report on youth employment drawn
up for the Conference of Ministers responsible for youth, 8 to 12
August 1998, Lisbon, point 1.1.

(17) Ibid.

percentages provided by Confindustria for the two age
groups do not correspond to the data it provided (Table
2). According to Table 2 but Table 12, the percentage
of jobseekers seems, on the contrary, to fall considerably
in the 25 to 29 age group compared with those aged
the
20 to 24. This trend is discernible throughout
country and is confirmed by other statistics which
compare unemployment
in Italy with the
European average (Table 1).

rates

(79) The data supplied by the Italian authorities (Table 7)
show that
there is a higher percentage of registered
jobseekers in the 25 to 32 age group than in the 19 to
24 age group. They also give percentages of registered
unemployed that are higher than the rates calculated by
Eurostat (Table 1). The difference is due to the fact that
the statistics compiled by Eurostat are based on the ILO
definition of unemployment, which is based on three
criteria: persons must be unemployed, be actively
seeking employment and be prepared to start work in
two weeks. These criteria, however, are not applied for
inclusion in the registers of jobseekers, which generally
include
seeking
are
employment (e.g. students who have not yet completed
their studies).

persons who

actively

not

(80)

the Commission,

In the opinion of
the data on
unemployment rates, even as regards their distribution
over time, must be compared with other data, such as
the average time spent by unemployed persons seeking
employment and the average age at which a university
degree is obtained.

of

The

nature

unemployment.

(81) With regard to the first factor, i.e. average jobseeking
time, it is worth noting that this increases with age, to
reach 37 months in the 30 to 39 age group (Table 6).
These data go some way towards explaining the
structural
Italian
authorities pointed up this characteristic of the Italian
labour market, especially as it is more marked in the
south, where unemployment is higher (Table 11). As
regards average jobseeking time in the different age
groups, the Italian authorities referred to the results of
ISTAT’s Second Report on youth for 1997 (see recital
48). The report
that 65 % of
unemployed persons aged 15 to 24 stated that they had
been seeking employment for over a year (long-term
unemployed); that figure rose to 68 % for those aged 25
to 34. On the basis of
the
Commission therefore concludes that the trend should
be
structural
unemployment and in terms of the raising of the age
limit for the definition of (cid:145)young persons(cid:146).

in particular

information,

from the

standpoint

examined

shows

that

of

15.2.2000

EN

Official Journal of the European Communities

L 42/13

the most

is one of

(82) Long-term unemployment (more than a year without a
important characteristics of
job)
structural unemployment and it was taken into account
in the guidelines on aid to employment. Together with
young people, the long-term unemployed are one of the
referred to in the
most underpriviliged categories
guidelines. The large number of young people available
for work and their (cid:151) in many cases (cid:151) advanced level
of education (university degree) further complicates the
situation of
the long-term unemployed, who, being
often less skilled or possessing increasingly obsolete
skills, find themselves at a disadvantage on the labour
market in comparison with young, often more skilled
jobseekers.

(85)

degree is awarded, that (cid:145)critical(cid:146) age shifts in the case of
graduates and no longer corresponds to the 20 to 24
age group.

the foregoing,

In view of
the Commission considers
that, solely as regards university graduates, the statistics
and the institutional factors relating to the length of
studies
the
of
unemployment affecting the 25 to 29 age group.

structural

nature

justify

the

(83) According

the

Italian
to the data presented by
authorities and Confindustria, young graduates obtain
their degrees at a relatively advanced age. The statistics
on the age at which a first degree (laurea) is obtained
show that the percentage of persons obtaining a degree
increases up to the age of 25 and falls after the age of
26 (Table 8). Most are awarded their degrees at the ages
of 24 (11,8 %), 25 (18,8 %), 26 (18,7 %) or 27 (14,3 %).
The relatively advanced age at which a degree is
obtained results in late entry to the labour market. A
comparison of the Italian situation with that in other
Member States reveals an average age of 26,8 in Italy
against a European average of 25,7.

(84)

stated that

the average

If the maximum age for young persons is taken as 24,
then clearly a large number of university graduates
cannot benefit from the labour market incentives aimed
at them. Only those obtaining their (long-cycle) degree
at 23 or under, i.e. 4 %, would benefit from measures
limited to persons up to the age of 24. On the other
hand, those obtaining their (long-cycle) degree at 24, i.e.
11,8 %, will have very little time to benefit from those
measures. It is worth noting in this connection that the
Italian authorities
age of
graduates entering the labour market is 27. Entry means
the age at which they started their first job, the labour
market
the period between
obtaining a degree and finding employment for the first
time. The jobseeking period is thus more than one year
for those obtaining their degree under the age of 23,
24, 25 and 26. This phenomenon has relatively serious
consequences for the professional
the young
graduate owing to the fact that, as stressed by the ILO, a
prolonged period of unemployment at
the start of
working life can have a lasting effect on future work
prospects. The views of the ILO relate to entry to the
labour market of (cid:145)young persons(cid:146) of up to 24 years of
age and are based on the fact that unemployment at the
start of a career can damage productive potential
permanently (18). Taking account of the age at which the

access period being

life of

(86) The Commission notes that aid for employment under
training and work experience contracts makes
two
positive contributions
to an Italian labour market
experiencing severe structural and youth employment
difficulties. The first consists in the training provided for
the second consists in the
in the contracts, whilst
condition attached to the scheme that employment on
training and work experience contracts is not authorised
where a firm has not retained in employment at least
50 % of workers whose training and work experience
contracts expired in the preceding 24 months. The
condition is apparently intended as a further incentive
to firms to maintain the jobs for longer.

(87) The compensatory contribution in the form of training
provided by the employer must be taken into account
in assessing the intensity of the aid granted to him. It
represents a financial and organisational
input which
must not, however, be viewed as an initial investment.
is defined in the guidelines on national
The latter
regional aid as (cid:145)an investment in fixed capital relating to
the setting-up of a new establishment, the extension of
an existing establishment, or
the starting-up of an
activity involving a fundamental change in the product
or production process of an existing establishment(cid:146) (19).
Aid to job creation linked to the carrying-out of an
the forms of
initial
investment aid provided for
in the guidelines on
national regional aid.

investment project

is one of

(88)

In addition, the condition imposed in the guidelines on
aid to employment, namely that (cid:145)the post falls vacant
following voluntary departure and not redundancy(cid:146) (20),
Italian legislation under
is met
there be no
examination makes it a condition that

inasmuch as

the

(18) Report drawn up by the ILO for the conference of Ministers
responsible for youth, 8 to 12 August 1998, Lisbon, point 1.5
(see footnote 16).

(19) OJ C 74, 10.3.1998, p. 9.
(20) See footnote 5.

L 42/14

EN

Official Journal of the European Communities

15.2.2000

redundancies. Accordingly, as stated in the guidelines,
in the case of
(cid:145)there is no need for net job creation(cid:146)
underprivileged categories.

to encourage job creation in view of the proportionality
between the social security contributions qualifying for
the reduction and the remuneration of the workers and
in view of the fact that the measures meet the needs of
the regions concerned.

(89) With regard to the selective nature of

the aid,

the reduction in social

the
Commission notes that the differential part of the aid
security
exceeding 25 % of
contributions is granted by the Italian authorities only
to certain types of firm. Such firms are differentiated
from the others by sector and size. In addition, the aid
intensity varies according to location in Italy. The aid is
granted at varying intensities, according to the region
to firms in the commercial and tourism
concerned,
sector with a minimum of 15 employees,
to craft
industries and to all
located in areas with
firms
unemployment levels higher than the national average.
Such measures cannot be regarded as general measures
as they do not apply uniformly to the economy as a
whole and they favour
specific firms and specific
sectors (21).

social

reduction

100 % in

(90) The total aid per firm is directly dependent on the
number of workers recruited. The Italian authorities
the maximum amount of aid
have estimated that
(overall
security
of
i.e. 25 % as general measures applicable
contributions,
the territory and 75 % maximum as a
throughout
reduction) per annum and per worker
subsequent
employed,
to
training
net
ITL 9 707 256 (EUR 5 013,38). Firms benefiting from
the subsequent maximum reduction of 75 % would
receive ITL 7 280 442 (EUR 3 760,03), whilst
firms
benefiting only from a subsequent reduction of 15 %
would receive ITL 2 426 814 (EUR 1 253,34),
i.e. an
aggregate figure of 40 % (see recital 12).

amounts

costs,

of

for workers with particular difficulties

(91) The Commission notes that, solely as regards the aid to
training and work experience
encourage the use of
in
contracts
i.e. young
entering or re-entering the labour market,
people under 25, young graduates up to the age of 29
and the long-term unemployed (out of work for more
than a year) or the aid intended to create new jobs, total
aid does not exceed the amount needed to promote the
creation of new jobs, taking account of the mandatory
training content of
training and work experience
contracts and of the particularly serious unemployment
situation in Italy. The Commission also concludes that
the amount of aid does not exceed the amount required

(21) According to the first survey on State aid in the European
Community (1989), (cid:145)general measures comprise any interventions
that apply uniformly across the economy and which do not
favour certain enterprises or sectors(cid:146), (COM(88) 945).

(92) On the basis of

the

foregoing,

the Commission
concludes that only the aid to the creation of new jobs
and that specified in the preceding paragraph comply
with the relevant guidelines and may therefore qualify
for the exemptions laid down for that type of aid.

(93) On the other hand, the Commission takes the view that
aid for employment under training and work experience
contracts constitutes aid to maintain employment where
it is not intended either for the employment of workers
in entering or
experiencing particular
re-entering the labour market,
i.e. persons under 25,
graduates under 29 and the long-term unemployed
(more than one year without employment), or for the
creation of new jobs.

difficulties

(94) Whilst it is true that, according to the employment aid
guidelines, aid to maintain jobs means (cid:145)support given to
a firm to persuade it not to lay off its workers(cid:146) (22), the
aid in this case is not in fact paid to firms to encourage
them not to dismiss workers since the aid is granted for
and work experience
employment under
contracts. As the scheme does not require new jobs to
be created but, on the contrary, expressly stipulates that
there must be no redundancies, the aid may encourage
firms to replace natural wastage. It therefore encourages
firms to maintain its workforce without creating new
jobs. Thus the aid can be regarded as aid to maintain
jobs, which the guidelines on aid to employment treat
as similar to operating aid.

training

(95) Such aid can be authorised only if, under Article
87(2)(b) of the Treaty, it is intended to make good the
damage caused by natural disasters or exceptional
occurrences. Under certain conditions, aid to maintain
jobs may be authorised in regions qualifying for
exemption under Article 87(3)(a), i.e. aid to promote the
economic development of regions where the standard of

(22) See footnote 5.

15.2.2000

EN

Official Journal of the European Communities

L 42/15

living is abnormally low or where there is serious
underemployment.

(96) The Commission notes in the first place that the aid is
not restricted to the areas eligible for exemption under
Article 87(3)(a) of
the Treaty, as it applies to the
country as a whole. It is not degressive or limited in
time. As to whether it is likely to help firms overcome
structural handicaps and promote lasting development,
the Commission has
repeatedly warned the Italian
Government of the risks of such generalised measures.
Its negative stance is based on its conviction that this
type of measure has very harmful effects on competition
and trade which are not effectively counterbalanced by
the Community
sustainable
development or the removal of structural handicaps.

in terms of

interest

V.2. Aid for the conversion of training and work

experience contracts into open-ended contracts

V.2.(a) Assessment of the aid content of the measures to

convert training and work experience contracts into
open-ended contracts

(97) Since the measures concern a one-year extension of the
same aid provided for training and work experience
contracts and since the aid is even more selective, being
limited to Objective 1 areas only, the aid assessment
contained in point V.1.(a) is even more relevant to these
measures.

(98) Accordingly, it is clear that the measures in question are
liable to affect trade between Member States. In view of
the aid contained in the measures, it must be concluded
that they are caught by Article 87(1) of the EC Treaty
and Article 62(1) of the EEA Agreement inasmuch as
they constitute State aid which distorts competition to
an extent liable to affect intra-Community trade and can
be regarded as being compatible with the common
market only if they qualify for one of the derogations
laid down.

determine whether
common market under Article 87(2) and (3).

they are

compatible with the

(100) As regards the applicability of the exemptions provided
for in the Treaty, the comments in point V.1.(b) of this
Decision (see recitals 69 to 96) are also applicable to
this aid since the measures are similar.

(101) The guidelines on employment aid state that aid to
create jobs (cid:145)provides employment for workers who have
never had a job or who have lost their previous job(cid:146) and
that
the
creation of an additional job in relation to the (average)
workforce
firm
concerned(cid:146).

job creation means

a period of

job creation,

time) of

(over

(cid:145)net

the

i.e.

(102) The same guidelines also state that the Commission will
in
scrutinise the terms of an employment contract,
particular
compliance with the obligation to hire
workers for an indefinite period or for a sufficiently
long period.

(103) The

conversion of

fixed-term training and work
experience contracts into open-ended contracts does not
create new jobs as these jobs already exist; they are not,
however, stable jobs.

(104) As already stated by the Commission (23), measures
concerning the conversion of fixed-term contracts and
training and work experience contracts into open-ended
contracts cannot be regarded as measures either to
in view of their
create new jobs or to maintain jobs,
particular characteristics relating to the stabilisation of
temporary employment. The added value is therefore
constituted by the (cid:145)net creation of stable jobs(cid:146) which did
not previously exist.

(105) The Commission notes that, whilst the guidelines on aid
to employment do not provide for such measures, they
refer to the concept of stable employment as a positive
factor.
of
assesses
employment contracts and takes a favourable view only
stability of
if
employment.

they guarantee a certain degree of

provisions

therefore

the

It

V.2.(b) Compatibility with the common market

(106)

the Commission takes a
In certain cases,
favourable view of aid to convert fixed-term jobs into
stipulated in the
open-ended ones. However,

therefore,

as

(99) Having ascertained the aid content of the measures in
the Commission must

question under Article 87(1),

(23) See State aid N 692/97.

L 42/16

EN

Official Journal of the European Communities

15.2.2000

guidelines, a favourable view is subject to a twofold
obligation:

that the amount of aid does not exceed that which is
necessary to provide an incentive to create jobs.

(cid:151) the firm must not have dismissed any employees in

the 12 months preceding the conversion,

(cid:151) the number of jobs must be increased in relation to
the number of existing jobs in the six months
preceding the conversion, not
including the jobs
being converted.

(111) The Commission regards the other cases of aid for the
conversion of training and work experience contracts
into open-ended contracts which do not comply with
the net
job creation requirement as aid to maintain
employment. As stated in the employment guidelines,
the reasons
such aid constitutes operating aid. For
already given concerning aid for training and work
experience contracts,
the Commission considers that
such aid does not satisfy the conditions for the granting
of operating aid.

(107) The Commission is thus able to ascertain that the aid
not only stabilises precarious jobs but brings the added
value of a net creation of stable jobs which did not
previously exist and hence to verify that it is not simply
a matter of replacing an employee made redundant or
who has retired.

(108)

in the present

In view of the foregoing,
that,
requirement
employees does not
through fixed-term contracts or
sufficient stability of employment.

the Commission concludes
job creation
the number of
include those in jobs created
jobs not providing

is applicable only if

the net

case,

training

conversion of

(109) Accordingly, the Commission considers that only aid for
the
and work experience
contracts into open-ended contracts which comply with
the obligation to increase the number of jobs in relation
to existing jobs in the firm (average over a period
preceding the conversion) complies with the guidelines
on employment aid and hence qualifies for exemption.
calculated excluding staff
The workforce must be
recruited on fixed-term contracts or jobs not providing
sufficiently stable employment.

(110) The Commission considers that the aid intensity should
be calculated on the basis of aid granted in the period
preceding the conversion. During that period, employers
benefited from aid granted for the same workers whose
contracts were subsequently converted. Thus, aid was
granted in total for three years for each job created. The
Commission notes that only in the cases described
above was the intensity in proportion to the objective,
taking account of
the jobs created are
open-ended and unemployment in the areas concerned
is particularly severe. For the same reasons as those
given above in connection with aid for training and
work experience contracts, the Commission considers

the fact

that

VI. CONCLUSIONS

that

(112) The Commission concludes
88(3)

infringed
Italy has
non-notified
for
aid
Article
by
employment under
and work experience
contracts that was provided for in Laws Nos 863/84,
407/90, 169/91 and 451/94 and has been granted since
November 1995.

granting
training

(113) On the basis of the analysis set out in points V.1.(a) and
V.1.(b) of this Decision, the Commission considers that
only the aid granted for the employment of workers
who, at the moment of recruitment, had not yet found
employment or who had lost their jobs and who, as a
result of being recruited, contributed to the net creation
of new jobs in the firms concerned is compatible with
the common market.

their job,

(114) The aid granted to workers experiencing difficulties
i.e. after
entering or re-entering the labour market,
having lost
is also incompatible with the
common market. The persons concerned are those who,
because of their particular characteristics, are in a weak
position on the labour market. This is true in particular
of persons under 25, graduates up to the age of 29 and
the long-term unemployed (unemployed for more than
from the aid,
a year). However,
employers must not have dismissed any staff
in the
preceding 12 months and must also have retained (on
open-ended contracts) at
the workers
whose training and work experience contract ended in
the preceding 24 months.

in order to benefit

least 60 % of

(115) The measures which comply with the de minimis rule (24)
are not covered by Article 87. Under that rule, the total

(24) Commission notice on the de minimis rule for State aid (OJ C 68,

6.3.1996).

15.2.2000

EN

Official Journal of the European Communities

L 42/17

amount of aid granted to firms employing persons on
training and work experience contracts must not exceed
EUR 100 000 over a three-year period. The same notice
specifies that the rule does not apply to the industries
covered by the ECSC Treaty,
to
transport or to aid towards expenditure in connection
with agriculture or fisheries.

to shipbuilding,

(116) All

aid for

and work
employment on training
experience contracts which does not comply with the
conditions set out in recitals 113 to 115 is incompatible
therefore be
with the common market and must
recovered.

(117) The Commission concludes

that

infringed
Article 88(3) by granting the aid provided for in Article
15 of Law No 196/97 for the conversion of training
open-ended
and work
contracts.

experience

Italy has

contracts

into

(118) For the reasons set out in points V.2.(a) and V.2.(b),
recitals 97 to 111 of this Decision, the Commission
notes that only aid for the conversion of training and
work experience contracts into open-ended contracts
which complies with the net job creation requirement
in the period preceding the conversion is compatible
with the common market. The total workforce should
be calculated net of workers on contracts that are
sufficiently stable
open-ended or
employment (see recital 106).

that do not offer

(119) Measures which comply with the de minimis rule (25) are
not covered by Article 87. The same considerations as
those given in respect of training and work experience
contracts also apply to these measures (see recital 115).

amount in question from the recipients (26) in order to
restore the status quo. This is the case with regard to
the aid which is deemed incompatible with the common
market in this Decision and which must be repaid by
the recipients.

(122) The aid must be recovered in accordance with the pro-
cedures and provisions of Italian law and must include
interest from the date on which the aid was granted
until the date it is actually repaid, with the rate applied
being the reference rate used to calculate the net grant
equivalent of regional aid,

HAS ADOPTED THIS DECISION:

Article 1

1.
The aid granted unlawfully by Italy since November 1995
for employment under the training and work experience con-
tracts provided for in Laws Nos 863/84, 407/90, 169/91 and
451/94 is compatible with the common market and the EEA
Agreement provided that it concerns:

(cid:151) the creation of jobs in the recipient firm for persons who
have not yet found employment or have lost their previous
employment within the meaning of the guidelines on aid
to employment,

(cid:151) the employment of workers experiencing particular diffi-
culties in entering or re-entering the labour market. For the
purposes of this Decision, workers experiencing particular
difficulties in entering or re-entering the labour market
shall mean young persons under the age of 25, persons up
to the age of 29 and the long-term unemployed, i.e. out of
employment for more than one year.

Aid for training and work experience contracts which
in paragraph 1 is

2.
does not satisfy the conditions set out
incompatible with the common market.

(120) All the aid for the conversion of training and work
experience contracts into open-ended contracts which
does not comply with the conditions referred to above
is incompatible with the common market and must
therefore be recovered.

Article 2

(121) Where aid that

incompatible with the common
market has been granted unlawfully, the Commission
may require the Member State concerned to recover the

is

(25) See footnote 24.

1.
The aid granted by Italy under Article 15 of Law No
196/97 for the conversion of training and work experience

(26) Commission notice of 24 November 1983 (OJ C 318,
24.11.1983, p. 3). See also the Court of
Justice judgments in
Cases 70/72 of 12 July 1973 Commission v Germany [1973] ECR
813 and 310/85 of 24 February 1987 Deufil v Commission [1987]
ECR 901.

L 42/18

EN

Official Journal of the European Communities

15.2.2000

contracts into open-ended contracts is compatible with the
common market and the EEA Agreement provided that it com-
plies with the net job creation requirement as defined in the
Community guidelines on aid to employment.

from the date on which the aid was paid until the date on
which it is effectively recovered. The interest shall be calculated
on the basis of the reference rate used to calculate the net
grant equivalent of regional aid.

The workforce employed by a firm shall be calculated without
taking account of jobs resulting from the conversion and jobs
created through fixed-term contracts or not guaranteeing suffi-
ciently stable employment.

2.
Aid for the conversion of training and work experience
contracts into open-ended contracts which does not satisfy the
requirement laid down in paragraph 1 is incompatible with the
common market.

Article 4

Italy shall inform the Commission within two months of the
date of notification of this Decision of the measures it has
taken to comply herewith.

Article 5

Article 3

This Decision is addressed to the Italian Republic.

Italy shall take all necessary measures to recover from the reci-
pients the aid which does not satisfy the conditions of Articles
1 and 2 and has already been unlawfully paid.

Done at Brussels, 11 May 1999.

Repayment shall be made in accordance with the procedures
of Italian law. The amounts to be repaid shall bear interest

For the Commission

Karel VAN MIERT

Member of the Commission