Inflation and wages: the debate on the sliding scale in Italy (1974-1985)

The scala mobile (wage sliding scale) introduced in post-war Italy was intended to protect the purchasing power of wages. However, the mechanism provided for differences in the contingency indemnity (the part of the wage that varied with inflation) between different categories of workers, distinguishing between qualifications and geographical areas (establishing so-called wage cages, gabbie salariali). The January 1975 agreement between trade unions and Confindustria (known as Agnelli-Lama Agreement) unified and equalised contingency points for all workers, regardless of category, qualification, age or gender. The debate among economists on the relationship between the sliding scale system and inflation was intense and culminated with the well-known contribution of Franco Modigliani and Padoa-Schioppa in 1977 and with Ezio Tarantelli’s reform proposal of 1981. The aim of this paper is to reconstruct the intense debate on the sliding scale between 1974 and 1985 by highlighting the different analytical approaches and the resulting implications for economic policy designed to overcome the economic crisis.