Use of job vouchers as payment in Italy

In 2008, the Italian government began implementing its “job voucher” payment system to bring some regulation to the wage payments made to seasonal agricultural workers, especially in the grape- and apple-growing regions in the northeast of the country. 

With many of these workers compensated by untaxed and undocumented cash payments, the voucher system was designed to provide a payment option that somewhat formalizes their employment and helps support state-funded programs. Without extending any employment contracts to workers, employers can purchase vouchers from the government and provide them to workers as payment. Workers can then redeem the vouchers for 75 percent of their cash value, with the remaining 25 percent going to fund the administration of the exchange, social security, and industrial injury insurance.

Over the past eight years, more and more Italian garment and footwear manufacturers have begun utilizing the “job voucher” system instead of providing their short-term workers with legal employment contracts.  Their use has recently skyrocketed, from around a half-million vouchers used in 2008 to 115 million in 2015.  This trend raises the prospect that work previously conducted by permanent workers in factories is increasingly being made informal, with all the risks associated with informal work.  For example, workers paid in vouchers have access to almost no workplace rights compared to workers with permanent employment contracts; vouchers confer no ability to bargain collectively, earn sick or holiday pay, or earn unemployment benefits.  

Our issue brief below explains how this can lead to further risks like unpaid overtime or excessive work hours, and provides recommended actions for brands that encounter this practice in Italy.