The employers have no incentive. All of these off the books workers were referring to being unable to get a contract. Well, once they have a contract, they cannot be fired. If they do get fired, they usually sue, and the worker wins 99% of the cases.
Italy is more Scoialist than anything. Due to recent changes (2008) the nuber of parites has decreased slightly - the the unserlying system is a nightmare.
Pary that it never get that bad here in the US...