The RED mechanism after its first years in force. Between regulatory innovation and limited practical application

Abstract

More than four years after the entry into force of art. 47 bis of the Workers' Statute, this paper updates and develops an earlier analysis of the Mecanismo RED (the employment flexibility and stabilisation mechanism) written shortly after its approval. The study reviews the legal and regulatory design of the Mechanism in its cyclical and sectoral modalities, the decision to activate it by the Council of Ministers and the role of the social partners, with particular attention to the problem of regional trade union representativeness and to the question of territorial competence, both recently addressed by the courts. It also examines the procedure for suspending contracts and reducing working hours, the social security contribution exemptions, the training requirements, and the specific benefits granted to affected workers, including the case law on whether these periods count towards subsequent unemployment benefits. The quantitative analysis of the only two activations to date –travel agencies and motor vehicle manufacturing, both sectoral– reveals a persistent contrast between the sophistication of the regulatory design and the modesty of its practical application, compounded by the Fund's lack of endowment, the failure to carry out the legally mandated evaluation, and the Mechanism's inoperability in the face of purely regional crises.