Italy's job market, supported by a strong service sector and thriving manufacturing industries, is an excellent destination for hiring. Transitioning from an agricultural economy to an industrial powerhouse post-WWII, Italy excels in fashion, automotive, and technology sectors. This economic transformation led to rapid urbanization and growth, making Italy a global leader in exports such as metals, machinery, and textiles. With a skilled workforce and strategic economic landscape, Italy offers significant advantages for businesses looking to expand or establish operations in Europe.

What you need to know before hiring employees in Italy

Job market in Italy

• Italy's job market is recovering, with the unemployment rate falling to 7.6% in May 2023, more than 2 percentage points lower than before the COVID-19 crisis. This improvement highlights a resilient labor market.
• Total employment increased by 1.7% year-on-year in May 2023, showing steady growth despite economic challenges. This trend indicates a stable employment landscape.
• Active labour market policies are crucial in Italy's National Recovery and Resilience Plan, ensuring continued support and high-quality training for jobseekers. These policies are essential for long-term employment growth.
• The adoption of AI and automation technologies has enhanced high-skilled jobs without significantly reducing labor demand. This trend shows the potential for tech-driven job creation.
•  Significant investments from the National Recovery and Resilience Plan are expected to create around 760,000 jobs annually from 2023 to 2027, especially in green and digital sectors. These investments will drive job growth across various industries.

Italy Hiring Trends

For 2024, the hiring trends in Italy reflect a cautiously optimistic economic recovery, influenced by several key factors:

• Italy's hiring trends are influenced by its fluctuating GDP, which was about 2.26 trillion USD in 2023, showing resilience despite economic challenges since the 2008 crisis.
• With the GDP ranking Italy among the top 10 global economies, there is a strong foundation for job creation, particularly in manufacturing and services.
• The country's focus on reducing its budget deficit and national debt has improved fiscal stability, indirectly supporting job growth by creating a more stable economic environment.
• Inflation is projected to rise gradually, reaching 2% by 2029. This stable inflation rate can provide a predictable economic environment, beneficial for long-term hiring plans.
• Significant investments and policies aimed at boosting efficiency and productivity are expected to create new job opportunities, particularly in sectors like technology, green energy, and infrastructure.
• Despite regional disparities, Italy’s diverse economy continues to offer varied employment opportunities, especially in high-growth sectors such as pharmaceuticals, robotics, and advanced manufacturing.

How to hire employees from Italy

1. Set up an entity in the country

Engaging employees directly in Italy without a local entity is possible but involves navigating complex business and tax regulations. To establish a sustainable presence and ensure compliance, it is advisable to set up a local entity such as a Società per Azioni (S.p.A.) or Società a Responsabilità Limitata (S.r.l.) and register with the local tax authorities. This process includes obtaining a Tax Identification Number (Codice Fiscale) from the Agenzia delle Entrate. While the process can be intricate and requires careful planning, obtaining professional guidance or legal support can facilitate a seamless establishment, allowing the business to operate efficiently in Italy.

2. Hire independent contractors

Hiring independent contractors in Italy offers flexibility and may be economically advantageous for businesses requiring specialized expertise or temporary assistance on projects. To engage contractors effectively, companies should draft comprehensive agreements that clearly detail the project scope, timeline, compensation terms, and mutual obligations. It is essential to comply with Italian labor laws to avoid any misclassification of their employment status. Independent contractors in Italy are responsible for their own tax and social security contributions, which simplifies payroll processes for the hiring organization.

3. Partner with an EOR in the country

Partnering with an Employer of Record (EOR) in Italy can simplify the hiring and management of employees, particularly for companies that do not have a local presence. An EOR handles all legal responsibilities, payroll, taxation, and human resources tasks, allowing businesses to focus on their core operations. This partnership is particularly beneficial for companies looking to test the Italian market without establishing a full local entity or for those needing to quickly integrate talent in line with local employment laws. Utilizing the expertise of an EOR helps businesses effectively meet their staffing needs while ensuring full compliance with Italy's complex regulatory landscape.

Employment Laws You Must Know Before Hiring in Italy

Compliance risk while hiring in Italy

Compliance risks while hiring in Italy include navigating complex labor laws, ensuring proper worker classification, adhering to social security and tax obligations, and following regulations on working hours and contracts. Non-compliance can result in legal penalties, financial liabilities, and reputational damage, making it crucial to understand and follow local regulations.

Key Aspects of Italyn Labor Law:

Employment Contract: In Italy, employment contracts are categorized mainly into indefinite and fixed-term types. Indefinite contracts, often verbal, are presumed under law but are advisable to be documented in writing. Fixed-term contracts are suitable for specific cases such as new projects, temporary increases in workload, or seasonal work, and must always be in writing. Both types of contracts can also be part-time if the work week is less than 24 hours. All employment documents must be in Spanish, or officially translated in case of disputes. Registration with the Labor Ministry is required, ensuring compliance with local employment regulations.

Working Hours: In Italy, the standard working hours are typically set at 8 hours per day, amounting to 40 hours per week.

Overtime: Any work exceeding the standard weekly hours is classified as overtime and is regulated by employment contracts or collective agreements. Generally, the maximum limits for overtime compensation are defined by the National Collective Agreements (NCA).

Minimum Wage: Italy does not have a statutory minimum wage. Instead, minimum wages are determined by the sector-specific National Collective Agreements (NCAs) for each contractual level.

Payroll laws in Italy 

In Italy, payroll is typically processed on a monthly basis, with payments disbursed on the 27th of each month.

Employment benefits in Italy

Leave Policies in Italy

Paid Time Off:

In Italy, the minimum annual leave is determined by the relevant collective agreement, which typically provides for at least four weeks of paid leave per year.

Public Holidays:

There are 12 national holidays in Italy.

Sick Days:

In Italy, employees receive paid sick leave funded initially by the employer and then by the government. For the first two periods, the employer pays 100% for the first three days, decreasing to 66% and 50% for subsequent periods. From day four to 21, both employer and government share payments, then government covers 66% from day 22 onwards. Medical certificate required from day one.

Maternity Leave:

In Italy, all female employees are entitled to five months of paid maternity leave, typically taken two months before the due date and three months after childbirth. This leave can start earlier if the work is deemed dangerous to the health of the mother or unborn child, or it can be delayed until after childbirth. During maternity leave, employees receive 80% of their regular salary, paid by the employer and later reimbursed by the INPS.

Additionally, new mothers can take up to six months of unpaid leave following their maternity leave. Alternatively, if a mother opts not to take parental leave, she can work reduced hours of six hours a day until the child turns one year old.

For mothers whose income was below 8,145 EUR before taking maternity leave, their maternity indemnity will be extended by an additional three months.

Paternity Leave:

In Italy, fathers are entitled to compulsory paternity leave of 10 days, to be taken within five months of the child's birth. During this leave, they receive 100% of their regular salary.

Public Health Insurance 

In Italy, public health insurance is primarily managed through EsSalud (Social Health Insurance), funded by payroll contributions from employers and employees. This system provides a broad range of healthcare services, including medical, surgical, pharmaceutical, and hospital care for employees and their dependents. Additionally, Italy offers the Comprehensive Health Insurance Scheme (SIS), aimed at the uninsured population, particularly those who are poor or extremely poor. SIS ensures access to various preventive and curative services, making healthcare more inclusive. Both systems play crucial roles in ensuring that a significant portion of the Italyvian population has access to necessary medical services.

Filing tax in Italy

Income Tax:

In Italy, employee payroll contributions include a 10% social security tax, making the total employee cost 10%. Employee income tax rates are structured as follows: 23% for income up to 15,000 EUR annually, 25% for income between 15,000 and 28,000 EUR annually, 35% for income between 28,000 and 50,000 EUR annually, and 43% for income exceeding 50,000.01 EUR annually. Additionally, employees are subject to a regional tax ranging from 1.23% to 3.33%, and a municipal tax ranging from 0.00% to 0.90%.

Other Tax and Social Security Contributions:

In Italy, employers are responsible for several payroll contributions. Social security contributions, which cover pensions, disability and survivors’ benefits, sick leave, and maternity, paternity, and parental leave, range from 29% to 32% of the employee's salary. Additionally, employers contribute between 0.40% and 1.00% for Injuries at Work Insurance (INAIL), with the rate varying by occupation. They also contribute 8% towards TFR (severance pay). These contributions collectively result in a total employment cost for employers ranging from 29.40% to 41.00% of the employee's salary.

Business culture in Italy 

Business culture in Italy is distinct and knowing its nuances can significantly enhance professional interactions and operations:

• Italian businesses often have a clear hierarchical structure. Decisions are typically made by senior management, and respect for authority and rank is emphasized.
• Building strong personal relationships is crucial. Trust and loyalty are valued, and business interactions often start with getting to know each other on a personal level.
• Italians appreciate direct and expressive communication. Meetings may involve animated discussions, and non-verbal cues play a significant role.
• Maintaining a balance between work and personal life is important. Italians value their leisure time and family commitments, often taking extended lunch breaks and enjoying numerous holidays.
• There is a strong emphasis on quality and attention to detail. This applies across various sectors, from manufacturing to services, reflecting a commitment to excellence and craftsmanship.

Top sectors to hire from in Italy

Services Sector

The services sector dominates Italy's economy, contributing 64.3% to the GDP in 2022 and employing 69.31% of the workforce in 2021. This sector encompasses tourism, finance, healthcare, and retail, offering diverse hiring opportunities. The emphasis on high-quality service and Italy's rich cultural heritage drive demand for skilled professionals in hospitality and customer service roles.

Industry Sector

Industry is vital, accounting for 23.82% of the GDP in 2022 and employing 26.64% of the workforce in 2021. Key industries include manufacturing, automotive, and fashion. Italy's reputation for craftsmanship and innovation makes it a prime location for hiring skilled workers in engineering, production, and design.

Agriculture Sector

Although agriculture contributed only 1.82% to the GDP in 2022, it employed 4.05% of the workforce in 2021. The sector remains essential for Italy's food and wine production, providing opportunities for roles in agribusiness, farm management, and sustainable agriculture practices.

Top cities to hire from Italy

When considering top cities in Italy for recruiting talent, these urban centers stand out for their economic activity, educational institutions, and sectoral strengths:

Milan

Milan is Italy's financial and industrial hub, renowned for its thriving fashion, design, and technology sectors. It offers a large pool of skilled professionals in finance, marketing, and IT, making it a prime location for hiring top talent.

Rome

As the capital city, Rome is a center for public administration, tourism, and cultural heritage. It provides a diverse workforce with expertise in government, education, tourism, and the arts, making it ideal for roles in these sectors.

Turin

Turin is known for its automotive industry and engineering prowess. Home to major automotive companies and research institutions, it is an excellent city for recruiting engineers, technicians, and manufacturing specialists.

Bologna

Bologna stands out for its strong educational institutions and vibrant food industry. The city is a key location for hiring in academia, research, food production, and logistics, benefiting from a well-educated workforce.

Naples

Naples is a major port city with strengths in logistics, maritime industries, and tourism. It offers a workforce skilled in shipping, transportation, hospitality, and culinary arts, making it a strategic location for these sectors

Hire in Italy compliantly with Gloroots

Gloroots, as an Employer of Record (EOR) in Italy, offers a streamlined solution for businesses aiming to establish and expand within the Italyn market. Our EOR platform enables rapid onboarding of candidates, facilitating swift operational setup while maintaining adherence to both local and international regulatory standards. Tailored to support businesses of varying sizes, Gloroots alleviates the complexities involved in payroll management, benefits administration, and tax obligations, removing the need to set up a local entity. This service empowers companies to efficiently assemble and oversee a remote workforce in Italy. For further details on how Gloroots can assist with your recruitment needs in Italy, please reach out to us.

Frequently Asked Questions 

What are the key employment laws to consider when hiring in Italy?

When hiring in Italy, it's essential to comply with local labor laws, which include regulations on working hours, minimum wage, employee benefits, and termination procedures. Employers must provide written employment contracts and adhere to social security and tax obligations. Understanding the nuances of Italian labor law is crucial to ensure compliance and avoid legal issues.

Can I hire independent contractors in Italy, and what should I consider?

Yes, you can hire independent contractors in Italy. However, it's important to draft clear agreements outlining the scope of work, payment terms, and responsibilities. Ensure that the contractor is correctly classified to avoid misclassification issues, which can result in legal and financial penalties. Contractors are responsible for their own taxes and social security contributions.

What are the benefits of setting up a local entity in Italy?

Setting up a local entity in Italy, such as a Società per Azioni (S.p.A.) or Società a Responsabilità Limitata (S.r.l.), allows businesses to directly engage employees, comply with local regulations, and operate efficiently. It also facilitates easier management of payroll, benefits, and taxes. Professional guidance can help navigate the complex process of establishing a legal entity.

How can partnering with an Employer of Record (EOR) benefit my business in Italy?

APartnering with an Employer of Record (EOR) in Italy simplifies the hiring process by managing all legal responsibilities, payroll, taxation, and HR tasks. This arrangement is particularly beneficial for companies without a local presence, as it allows them to quickly integrate talent and ensure compliance with Italian labor laws without the need to set up a local entity