January 9, 2012 5:47 pm

Monti tackles Italy unions over labour reforms

After raising taxes and cutting public spending, Mario Monti’s government of technocrats is taking on the trade unions in the next stage of his emergency plan to return Italy’s stalled economy to growth.

Italy is almost unique in Europe in posting falling productivity rates over the past decade and Mr Monti’s reforms are aimed at liberalising the labour market by introducing more flexible contracts backed by a more comprehensive system of social welfare to encourage workers to switch jobs.

Elsa Fornero, labour minister, met leaders of the CISL and UIL union federations on Monday evening. The government, which intends to start tabling legislation before parliament by the end of the month, insists it is engaging in consultations and not negotiations, despite the possibility of further strike action.

Mr Monti, prime minister, says “nothing is taboo” in the talks but the government did not tackle the most sensitive issue of article 18 of the workers’ statute covering redundancies in companies employing more than 15 people, which account for nearly half the workforce.

In office for nearly eight weeks after the collapse of Silvio Berlusconi’s centre-right government, Mr Monti’s administration is in urgent need of something to demonstrate to a worried public that last month’s emergency austerity package is delivering.

With collective action by Europe to shield Italy from the sovereign debt crisis absent, financial markets continue to punish the eurozone’s third largest economy. The yield gap between Italian and German 10-year bonds hit 530 percentage points on Monday, close to the record of 566 points reached shortly before Mr Berlusconi resigned.

Mr Monti needs progress in his “Grow Italy” programme on labour reforms and liberalisation of services to demonstrate to Brussels a seriousness of intent that warrants financial support for Italy. He is due to meet Angela Merkel, German chancellor, in Berlin on Wednesday.

While Rome has been short on details over its proposed labour reforms, Mr Monti says he wants to narrow the gulf between contracts that effectively give some workers life-long protection and those that are on vulnerable short-term contracts. Italy has one of the lowest employment rates in Europe, with women and young people struggling to find jobs.

Employers, whose Confindustria association will meet Ms Fornero on Wednesday, maintain that greater flexibility in long-term contracts would result in higher productivity.

“It is easier to divorce your wife than fire your employee,” commented one entrepreneur who asked not to be named.

Raffaele Bonanni, leader of CISL, said his union’s objectives were “more work, greater growth, more support to women and young workers and more flexible hours”.

CGIL, Italy’s largest and more leftwing union federation, argues that Italy’s labour system is already “excessively flexible”, functioning with 46 types of contracts that it proposes reducing to five. Claudio Treves, author of a union labour study, notes that at present only 18 out of 100 jobs created are on “life-long” contracts.

The unions’ case appears to be backed up by the Paris-based Organisation for Economic Co-operation and Development. Its latest statistics from 2008 show that individual Italian workers in “regular employment” are less protected than their peers in France and Germany but more protected than in the UK and US.

However, when it comes to making groups of workers redundant, then Italy is among the top 10 countries offering most protection for employees.

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