Tags: italy | euro | reform | monti

Italy's Monti Runs into Trouble Over Labor Reform

Thursday, 22 March 2012 04:50 PM

Prime Minister Mario Monti's drive to force through labor reform in Italy ran into political trouble on Thursday, raising the risk that the coalition supporting him in parliament could splinter or the measures be weakened.

The leadership of the center-left Democratic Party (PD), which supports Monti, had initially seemed ready to accept the reform despite trenchant opposition from its close ally the leftwing CGIL union, which has called a day-long protest strike.

But overnight, apparently under pressure from the left of the party, PD leader Pier Luigi Bersani expressed anger over the technocrat premier's tactics in brushing aside opposition to the reforms.

"Pay attention. Monti cannot tell the PD to take it or leave it. You cannot do this," Bersani said on a state television talk show on Wednesday night.

The PD is the second biggest group in a grand coalition supporting Monti and essential if he is to get laws through parliament.

The reforms to employment protection laws dating back to the 1970s are central to Monti's drive to transform the euro zone's third-biggest economy and end a decade of stagnant growth.

They are also at the heart of a broader effort to restore confidence in the euro zone and are being closely watched on financial markets.

Raffaele Bonanni, head of the moderate CISL trade union which has been supportive of Monti's reform drive, said before going into new talks on Thursday that they were pushing to modify a proposal easing firing restrictions.

But Labor Minister Elsa Fornero told reporters after the meeting that Bonanni had not even asked for changes.

"There has been no climbdown, this must be clear, the government has no intention of taking steps backwards."

On Friday the cabinet will decide whether to present the reform to parliament as an emergency decree or a normal bill needing much longer for approval. Fornero stressed the need for urgency, calling on parliament to approve it quickly or have the courage to "send us home", meaning bring down the government.

"I hope and believe that the PD will be convinced of the merits of what we are proposing," she said.

Any changes are strongly resisted both by employers and the centre-right People of Freedom party (PDL) of former premier Silvio Berlusconi.

Emma Marcegaglia, outgoing president of employers' organisation Confindustria, said softening of the reform would make it useless. "Any more weakening ... would be unacceptable," she said. "It would be better not to do it at all."

PDL secretary Angelino Alfano responded to Bersani on Thursday by saying that his party, which is the biggest group supporting Monti, would not allow the PD to weaken the law.

He told a radio programme that his centre-right party would insist on their own changes if the PD tried to modify the reforms drawn up by Monti's technocrat government.



The CGIL, Italy's largest union, said it would call a general strike after Monti on Tuesday impatiently swept aside opposition to a key provision on firing regulations following weeks of negotiation, and said the time for talking was over.

CGIL head Susanna Camusso said Monti was putting all the burden for reforming Italy on workers and pensioners. On Thursday the much smaller, right-wing UGL changed its position and said it would also oppose the reform.

Monti may have underestimated the amount of resistance to changes that would make it easier for companies to lay off employees and he is now facing the stiffest opposition since he took power four months ago.

The Democratic Party looks at risk of a serious split between its left wing, allied strongly with the CGIL, and a right wing largely formed from remnants of the defunct Christian Democrat party.

If it falls apart, as some analysts have long predicted, this would clearly undermine Monti's support in passing laws.

The reforms could be sealed by the government in a cabinet meeting on Friday before they are sent to parliament for approval at which time more changes could be made.

Monti was appointed in November, replacing Berlusconi, as Italy's borrowing costs hit levels that forced Greece, Ireland and Portugal to take international bailouts.

With politicians and unions subdued by the financial emergency, Monti was able to rapidly push through tough austerity measures including a major pension reform, against only half-hearted opposition.

However, since then Monti's success in restoring faith in Italy, combined with two huge bank funding operations by the European Central Bank, have sharply reduced the country's borrowing costs, lessened the emergency atmosphere and reduced pressure on the politicians to swallow their misgivings.

The sticking point for the CGIL and the left is Article 18 of the labour code, a 42-year-old talisman for the unions of concessions they won from bosses in the heyday of their power that is a strong disincentive to firing workers.

Monti, who clashed with U.S. corporate giants Microsoft and General Electric during his years as a European Commissioner in Brussels, won plaudits initially for taking off the gloves and dumping an Italian tradition of reaching compromise agreements through interminable negotiations.

But it is this tactic which has riled the left the most.

The reform of labour laws which contribute to Italy's lack of competitiveness was demanded last year by its European partners.

The government says existing laws discourage companies from hiring staff, hinder investment and condemn large numbers of young people to insecure, low-paid work, while older workers remain insulated in jobs for life.

More than 30 percent of 18 to 24-year olds in Italy are unemployed, and only about 57 percent of the working-age population has a job, one of the lowest rates in the euro zone.

© 2021 Thomson/Reuters. All rights reserved.

Thursday, 22 March 2012 04:50 PM
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