Hero or troublemaker? Milan prosecutor shakes up Italy's labour practices

By Emilio Parodi

MILAN, June 25 (Reuters) - A Milan prosecutor's crusading labour investigations have forced companies to grant fuller employment rights to more than 60,000 workers and recouped more than €1 billion ($1.1 billion) in unpaid taxes, but also sparked a heated debate over whether the judiciary in Italy is overstepping its role.

For his supporters, Paolo Storari has shown that chronic labour exploitation in the euro zone's third-largest economy can finally be tackled, giving job security to the most vulnerable workers and pushing companies to rethink how they operate.

Critics, however, say he has gone too far, stretching the limits of the penal code to dictate labour practices, and disrupting production in key sectors of the economy.

Storari, a fast-talking, energetic 60-year-old, is currently investigating alleged worker abuses in the construction of a new U.S. consulate in Milan. It is the latest of dozens of similar cases over the past five years that have started to redefine the legal framework for Italian business.

INVESTIGATIONS SPAN HIGH FASHION TO FOOD DELIVERY

Launched in 2021 in the logistics sector and later extended to fashion, private security, food delivery, large-scale retail and construction, the probes uncovered a widespread system based on subcontracting, short-lived cooperatives and labour-supply firms designed to cut costs and weaken protection for workers.

Data compiled by the Milan prosecutor's office seen by Reuters shows that since 2023 the investigations have led to the hiring or regularisation of 61,580 workers. 

Authorities have also recovered €1.134 billion ($1.30 billion) in VAT (sales tax) and a further €63 million in unpaid social security contributions.

However, businessmen such as Diego Della Valle, founder and chairman of Italian luxury group Tod's, have warned that the investigations, especially those into top brands, are hurting Italy's reputation.

"Quality products represent one of our country's fields of excellence and ... if someone questions this even slightly it causes enormous damage," he said after Storari targeted Tod's last year for alleged labour abuses among its suppliers. 

Tod's has since pledged to strengthen checks on its supply chain.

The prosecutor also has his critics among academics and legal professionals who say his preventive seizures and judicial administration measures - originally designed to protect companies infiltrated by organised crime - are too draconian.

One of their arguments is that by forcing firms to carry out extensive checks on contractors he is creating a form of liability not envisaged under Italy's criminal or labour law.

A defining feature of Storari's probes has been a shift away from the lowest levels of the supply chain - factories or cooperatives directly exploiting workers - towards the large client companies benefiting from the system.

TAILORING PROSECUTION METHODS FROM SECTOR TO SECTOR

Storari, who spent many years working in an anti-Mafia unit in his home city of Milan, rejects accusations he is creative in interpreting the law. He notes that his prosecution measures have been consistently backed by judges in Milan.

"We have simply started using rules that had not been applied in this field," he told a conference in the Milan courthouse in November. "The law should essentially be a method for solving problems," he said.

Following this philosophy, Storari has tailored his prosecution tools according to the sector under investigation.

In fashion, judicial administration orders have overhauled subcontracted workshops exploiting workers. In logistics and retail, he has used tax fraud laws to target cooperatives that provided workers without paying VAT or social contributions.

While his methods have been questioned, there is no doubt about their impact.

Dozens of major fashion brands, from Dolce & Gabbana to Gucci, are now in contact with prosecutors, reviewing their organisational models and restructuring supply chains. In logistics, companies have hired thousands of people previously working through cooperatives under exploitative conditions.

Security firms and food delivery platforms have also been forced to take on staff directly or improve pay, showing that rules can be enforced even in sectors dominated by small firms, complex subcontracting chains and strong cost pressures.

"Receiving calls from people who thank us because they finally have a salary and a job that allows them to live with dignity is the only real satisfaction in our work," he recently told his prosecuting team, according to one of its members.

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(Reporting by Emilio Parodi, editing by Gavin Jones and Keith Weir)