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The advantages of corporate welfare, amongst new roles and traditions: Pirelli, Olivetti, Marzotto…

In such difficult and uncertain times, we should reconsider corporate welfare and consolidate the role of strong social capital as an essential asset on which companies can erect new and better sustainability strategies.

An essential choice, after all, as well as a way to tackle our current crises: recession, an inflation exacerbated by the boom in energy prices after the Russian invasion of Ukraine, the increase in the cost of money and, simultaneously, the fragility of companies in these new competitive global markets, so controversial and so volatile. The newspapers talk about “bonuses” granted to employees by an increasing number of companies (such as Barilla, Lavazza, Illy, Ferrari, Della Valle, De’ Longhi, etc.), in order to reward their commitment during the COVID-19 pandemic (indeed, the Italian economy bounced back much faster than all other European ones thanks, above all, to the resilience of its better industry), and now to help them face rising bills and the dramatic increase in the cost of living. And the Meloni government is wisely considering to cut taxes on employee bonuses of up to €3,000.

Of course, defusing the risks of an inflation spiral, amongst rising prices and soaring salaries (as it happened in those incredibly hard 1970s) is a must. One-off bonuses, especially if exempt from tax, and higher salaries tied to production growth, are the right way to go, and a significant tax wedge cut is equally necessary in order to boost salaries, income and company profits (territorial entrepreneurial institution Confindustria has been rightfully insisting on this for a long time, though, sadly, the government only lent a superficial, uncertain ear to it).

Yet, ignoring the crisis, it’s essential to reflect on the long-term effects of corporate welfare, too. In this period, when the economic culture is transitioning from a focus on shareholder values (stock profits and prices, which are nevertheless important) to prioritising stakeholder values (values and interests of employees, consumers, suppliers, all those belonging to communities that share a relationship with a company), enterprises must better reward their own people and their productivity, innovation skills, sense of loyalty, creative intelligence and resourcefulness, if they want to retain their competitive edge.

Digital transformations and Industry 4.0 developments (the major cause in the growth of the Italian economy in 2021 and 2022) and the subsequent spread of smart-working practices demand, moreover, a new structure for industrial relationships and employment contracts, with salaries and income dictated by results, rather than working hours. And, in this new remuneration structure, corporate welfare (financial assistance, supplementary pension schemes, various other services) is bound to become more important, in order to provide drive and rewards through smart taxation, with the goal of improving the quality of life of workers and their families.

Lately, employment contracts have started down this route. The commitment of many enterprises that are responsibly mindful to sustainability – in environmental, social and economic terms – is prompting reflections and trials concerning welfare. The building process has begun and the work must go on.

Besides, Italy, as regards to these topics, can boast an excellent corporate culture tradition that should be rediscovered, reread, enhanced (just like Ferruccio de Bortoli did on Friday, at a conference held at the Università Cattolica of Milan, talking about Pirelli, Olivetti, Marzotto and other virtuous examples).

The historical context, from the end of the 19th century onwards, showed great social activism both in the Catholic world and within socialist organisations: mutual aid societies, workers’ and farmers’ leagues (from which trade unions originated), cooperatives, public credit institutions. An abundance of initiatives that, over time, became the foundations of a collaborative and communitarian social capital and inspired legislative measures, whose beneficial effects we’re still experiencing today.

It’s worth remembering the attention that the corporate world paid to working-class housing (such as the Crespi d’Adda village, built for the workforce of the Crespi family’s textile factories), health and welfare measures, schools for the workers’ children, and the first cultural and leisure organisations – welfare capitalism aimed at tackling the risks of social protests, but also genuine interest in the fates of those working in factories and workshops (the Italian production structure, born in small enterprises, also led, in many cases, to entrepreneurs and workers sharing similar experiences).

Some examples? At the beginning of May 1984, a cut-out article from La Lega Lombarda newspaper about the Pirelli plant in Milan (the rubber manufacturing company had been founded 12 years before by Giovanni Battista Pirelli, just after he earned his degree from the Polytechnic of Milan) reminds us that “in 1877 a mutual aid fund for sick labourers had been instituted, funded by very small contributions – from 10 to 15 cents for a fortnight – from workers’ pay-checks and fines.” Still from the Pirelli Foundation’s Historical Archives, we find evidence of a Società Anonima di Consumo (a limited consumer cooperative) set up by the plant’s workers who, in 1901, via a small illustrated card, asked “manager Giovanni Battista Pirelli” some help in implementing mutual aid activities. And, in May 1902, the first “Agreement between Company and Worker’s Committee for the improvement of treatment and miscellaneous provisions following the presentation of the Workers’ Memorandum” was drafted.

As per that “Agreement”, a veritable health care service, entirely funded by the company, was established, benefiting the workers and further extended beyond the boundaries of the factory, and it was followed, in 1926, by free health care for all employees. Then, over time, came initiatives for workers’ housing, summer camps for the employees’ children, contributions to finance the studies of the more talented and deserving and, still in the 1920s, the first corporate libraries (an initiative that’s still ongoing).

From Pirelli history to Marzotto and its textile factories in Valdagno: “We want the working and farming classes to gradually rise,” wrote in 1901 Vittorio Emanuele Marzotto, “An intervention by the State is necessary and must include a wise social legislation aimed at resolving foreseeable conflicts, managing the capital, protecting the workforce so that individual citizens will know what they are entitled to according to their economic power and work undertaken, and so that the contract will be held sacred by all parties involved.”

As Ferruccio de Bortoli tells us, “The Marzotto family built nurseries, sports centres – even, at that time, swimming pools – and nursing homes for employees and their families, and wanted to emphasise that these corporate welfare activities were to be considered as undisputed rights of the workforce rather than concessions. An already sufficiently comprehensive notion of social responsibility was already manifest at the time.”

And Olivetti? In August 1919, in the first edition of the Azione riformista (Reformist action) magazine, Camillo Olivetti wrote about the importance of “making all citizens aware of the duties of the present times, pointing out shortcomings and solutions while simultaneously setting up the necessary measures to rise to better political and economic forms, a new social asset where all that proceeds from work goes to those who do useful work.” And in the 1930s, he insisted on the fact that productivity depended on the degree of civic sense of employees and their support of solidarity principles – and, further, that the well-being of collaborators was a precondition for companies.

When he died, his son Adriano was already set to relaunch corporate welfare as part of the long period of implementations spanning from the end of the war to 1960 (as well described by Paolo Bricco in Adriano Olivetti. An Italian man from the 20th century, published by Rizzoli).

Another asset, as well as the canteens and educational support, was housing for the workers – the first plans had already been drafted in 1934, when Adriano had just been made managing director of Olivetti – “We know that one of the reasons for our strength lies in the well-being of all those who contribute to the wealth of the company.”

And there are more exemplary decisions: in 1938, a library was opened inside the factory; in 1940, there was a trial for full salary payment to employees on sick leave, who would otherwise have their wages cut: the company’s mutual fund paid for the difference between the amount set by the sector’s national collective agreement and the average salary of the category of the worker off sick; still in 1940, several specialised services were added – such as dental care – and extended to the workers’ families; and, in June 1941, the whole childcare and parenthood package offered by the company was revamped. As de Bortoli commented, “We were in 1941, the war was on and we achieved goals that today, considering the childcare debate, seem unattainable.” And corporate welfare, with its long history arising from the most mindful companies, continues to be a great modern paradigm.

In such difficult and uncertain times, we should reconsider corporate welfare and consolidate the role of strong social capital as an essential asset on which companies can erect new and better sustainability strategies.

An essential choice, after all, as well as a way to tackle our current crises: recession, an inflation exacerbated by the boom in energy prices after the Russian invasion of Ukraine, the increase in the cost of money and, simultaneously, the fragility of companies in these new competitive global markets, so controversial and so volatile. The newspapers talk about “bonuses” granted to employees by an increasing number of companies (such as Barilla, Lavazza, Illy, Ferrari, Della Valle, De’ Longhi, etc.), in order to reward their commitment during the COVID-19 pandemic (indeed, the Italian economy bounced back much faster than all other European ones thanks, above all, to the resilience of its better industry), and now to help them face rising bills and the dramatic increase in the cost of living. And the Meloni government is wisely considering to cut taxes on employee bonuses of up to €3,000.

Of course, defusing the risks of an inflation spiral, amongst rising prices and soaring salaries (as it happened in those incredibly hard 1970s) is a must. One-off bonuses, especially if exempt from tax, and higher salaries tied to production growth, are the right way to go, and a significant tax wedge cut is equally necessary in order to boost salaries, income and company profits (territorial entrepreneurial institution Confindustria has been rightfully insisting on this for a long time, though, sadly, the government only lent a superficial, uncertain ear to it).

Yet, ignoring the crisis, it’s essential to reflect on the long-term effects of corporate welfare, too. In this period, when the economic culture is transitioning from a focus on shareholder values (stock profits and prices, which are nevertheless important) to prioritising stakeholder values (values and interests of employees, consumers, suppliers, all those belonging to communities that share a relationship with a company), enterprises must better reward their own people and their productivity, innovation skills, sense of loyalty, creative intelligence and resourcefulness, if they want to retain their competitive edge.

Digital transformations and Industry 4.0 developments (the major cause in the growth of the Italian economy in 2021 and 2022) and the subsequent spread of smart-working practices demand, moreover, a new structure for industrial relationships and employment contracts, with salaries and income dictated by results, rather than working hours. And, in this new remuneration structure, corporate welfare (financial assistance, supplementary pension schemes, various other services) is bound to become more important, in order to provide drive and rewards through smart taxation, with the goal of improving the quality of life of workers and their families.

Lately, employment contracts have started down this route. The commitment of many enterprises that are responsibly mindful to sustainability – in environmental, social and economic terms – is prompting reflections and trials concerning welfare. The building process has begun and the work must go on.

Besides, Italy, as regards to these topics, can boast an excellent corporate culture tradition that should be rediscovered, reread, enhanced (just like Ferruccio de Bortoli did on Friday, at a conference held at the Università Cattolica of Milan, talking about Pirelli, Olivetti, Marzotto and other virtuous examples).

The historical context, from the end of the 19th century onwards, showed great social activism both in the Catholic world and within socialist organisations: mutual aid societies, workers’ and farmers’ leagues (from which trade unions originated), cooperatives, public credit institutions. An abundance of initiatives that, over time, became the foundations of a collaborative and communitarian social capital and inspired legislative measures, whose beneficial effects we’re still experiencing today.

It’s worth remembering the attention that the corporate world paid to working-class housing (such as the Crespi d’Adda village, built for the workforce of the Crespi family’s textile factories), health and welfare measures, schools for the workers’ children, and the first cultural and leisure organisations – welfare capitalism aimed at tackling the risks of social protests, but also genuine interest in the fates of those working in factories and workshops (the Italian production structure, born in small enterprises, also led, in many cases, to entrepreneurs and workers sharing similar experiences).

Some examples? At the beginning of May 1984, a cut-out article from La Lega Lombarda newspaper about the Pirelli plant in Milan (the rubber manufacturing company had been founded 12 years before by Giovanni Battista Pirelli, just after he earned his degree from the Polytechnic of Milan) reminds us that “in 1877 a mutual aid fund for sick labourers had been instituted, funded by very small contributions – from 10 to 15 cents for a fortnight – from workers’ pay-checks and fines.” Still from the Pirelli Foundation’s Historical Archives, we find evidence of a Società Anonima di Consumo (a limited consumer cooperative) set up by the plant’s workers who, in 1901, via a small illustrated card, asked “manager Giovanni Battista Pirelli” some help in implementing mutual aid activities. And, in May 1902, the first “Agreement between Company and Worker’s Committee for the improvement of treatment and miscellaneous provisions following the presentation of the Workers’ Memorandum” was drafted.

As per that “Agreement”, a veritable health care service, entirely funded by the company, was established, benefiting the workers and further extended beyond the boundaries of the factory, and it was followed, in 1926, by free health care for all employees. Then, over time, came initiatives for workers’ housing, summer camps for the employees’ children, contributions to finance the studies of the more talented and deserving and, still in the 1920s, the first corporate libraries (an initiative that’s still ongoing).

From Pirelli history to Marzotto and its textile factories in Valdagno: “We want the working and farming classes to gradually rise,” wrote in 1901 Vittorio Emanuele Marzotto, “An intervention by the State is necessary and must include a wise social legislation aimed at resolving foreseeable conflicts, managing the capital, protecting the workforce so that individual citizens will know what they are entitled to according to their economic power and work undertaken, and so that the contract will be held sacred by all parties involved.”

As Ferruccio de Bortoli tells us, “The Marzotto family built nurseries, sports centres – even, at that time, swimming pools – and nursing homes for employees and their families, and wanted to emphasise that these corporate welfare activities were to be considered as undisputed rights of the workforce rather than concessions. An already sufficiently comprehensive notion of social responsibility was already manifest at the time.”

And Olivetti? In August 1919, in the first edition of the Azione riformista (Reformist action) magazine, Camillo Olivetti wrote about the importance of “making all citizens aware of the duties of the present times, pointing out shortcomings and solutions while simultaneously setting up the necessary measures to rise to better political and economic forms, a new social asset where all that proceeds from work goes to those who do useful work.” And in the 1930s, he insisted on the fact that productivity depended on the degree of civic sense of employees and their support of solidarity principles – and, further, that the well-being of collaborators was a precondition for companies.

When he died, his son Adriano was already set to relaunch corporate welfare as part of the long period of implementations spanning from the end of the war to 1960 (as well described by Paolo Bricco in Adriano Olivetti. An Italian man from the 20th century, published by Rizzoli).

Another asset, as well as the canteens and educational support, was housing for the workers – the first plans had already been drafted in 1934, when Adriano had just been made managing director of Olivetti – “We know that one of the reasons for our strength lies in the well-being of all those who contribute to the wealth of the company.”

And there are more exemplary decisions: in 1938, a library was opened inside the factory; in 1940, there was a trial for full salary payment to employees on sick leave, who would otherwise have their wages cut: the company’s mutual fund paid for the difference between the amount set by the sector’s national collective agreement and the average salary of the category of the worker off sick; still in 1940, several specialised services were added – such as dental care – and extended to the workers’ families; and, in June 1941, the whole childcare and parenthood package offered by the company was revamped. As de Bortoli commented, “We were in 1941, the war was on and we achieved goals that today, considering the childcare debate, seem unattainable.” And corporate welfare, with its long history arising from the most mindful companies, continues to be a great modern paradigm.