This PhD thesis tracks the history of the Italian unemployment welfare during the second half of the twentieth century, offering an account of why the Italian system of social security never established a universal safety net against unemployment, choosing instead a social policy system targeted on the core industrial workforce. During the post-war period, Italian unemployment insurance remained severely lacking compared to other European countries. To compensate, the country relied on the Cassa Integrazione Guadagni (CIG), a short time work scheme providing a wage replacement allowance to compensate employees in the industrial sector for a temporary reduction of their working time. Starting from the late 1960s, the scope and duration of the CIG were progressively expanded to tackle manpower redundancies, catering for the weakness of other forms of support. During the 1970s and the 1980s, short time emerged as the chief instrument to cushion the economic and social consequences of the industrial crisis of the country. This thesis explains the peculiar characteristics of the Italian unemployment welfare model as a consequence of the country’s pattern of labour conflict, showing how industrial relations and social policy influenced one another. In the early postwar decades, while the unions were organisationally weak, the CIG emerged as a less expensive alternative to general unemployment insurance. This engendered a path dependent effect. Following the rise of industrial unrest and the strengthening of organised labour in the early 1970s, unions and employers favoured the increasing use of the CIG so as to protect their respective interests for job security and manpower flexibility, at the expense of the weaker strata of the labour market. Far from being a simple instrument of income maintenance, the CIG played a key role in shaping social relations of production at the work-place level and was used to diffuse industrial conflict on the shop floor. With the onset of deindustrialisation, during the 1980s, the CIG became a powerful tool for the demobilisation of organised labour.