Considering the long stagnation of Italian wages, and taking into consideration the current inflation growth, in this report we highlight the role of the Italian wage setting model in the dynamic of both employment and wages considering also the sectoral heterogeneity characterising the Italian labor market. Indeed, wage-setting institutions are important for explaining the differences in economic performance and the provisions characterizing collective or decentralized wage bargaining can influence several economic variables. Italy is characterized by a two-tier industrial relations system where the sectoral collective bargaining covers about 90% of workers, while company-level bargaining affects only a minority of Italian firms. This kind of system can affect both on wages and employment. In the following pages, using the data on private-sector employees deriving from the Istituto Nazionale di Statistica (Istat), we will provide some important evidence.