Rome - Prime Minister Mario Monti began a final push for a
deal with unions on Tuesday over a revamp of labour laws aimed at creating jobs
and underpinning wider reforms to Italy's weak economy.
The former European commissioner opened informal discussions
on a number of disputed points in the morning, ahead of a meeting with labour
leaders later this afternoon to try to reach a deal on easing long-cherished
legal protections for workers.
The government argues the rules have contributed to years of
chronically low job rates and minimal economic growth, but the biggest union is
Four months after he was summoned from academic
semi-retirement to rescue Italy from a Greek-style debt crisis, Monti has won
acclaim for taking action where his billionaire predecessor Silvio Berlusconi
had, in the eyes of many, offered little more than rhetoric and distraction.
At the head of a government of technocrats installed with
the approval of European Union partners - and Italy's creditors - Monti has
already forced through a €33bn austerity package to try to stop the rot in
He has made Italians swallow sharp cuts in future pension
provisions and done away with a swathe of regulations on service businesses.
But Monti, who has made labour market reform a priority for
his government, faces his first big moment of truth when he tries to deliver on
a promise to broker an agreement on labour market reforms.
Failure to persuade union leaders, who fear they may have
already given too much away in the atmosphere of national emergency, could mean
mass strikes and ructions within Monti's left-right parliamentary coalition.
The prime minister has vowed to press on with reforms
regardless, setting a deadline of the end of the month for reaching a workable
compromise. And whatever happens on Tuesday, the arguments are likely to rumble
The meeting is being closely watched by investors as an
indicator of how far Monti can go, and how fast.
Employers complain that regulations, many dating from the
1970s high-water mark of trade union power, are discouraging them from taking
on new staff and stifling productivity.
"We're running the last mile," said Corrado
Passera, the banker Monti brought into government in November as industry
minister. "An agreement is within reach," he told reporters in
remarks that are at odds with signals coming from some unions.
Two-tier labour market
Monti wants the unions to abandon rules enshrined in Article
18 of the labour law that make it difficult to fire workers in larger companies
for all but the grossest of misconduct.
The rules have been blamed for contributing to a two-tier
labour market familiar across southern Europe where older staff monopolise
protected positions, leaving the young either out of work altogether or on
precarious short-term contracts.
The metalworkers arm of the biggest union, the left-wing
CGIL, has already laid down its marker for the day by calling on members to
down tools for two hours of their own choosing during Tuesday.
Leaders say they
will not back down on rejecting Monti's proposed changes for newly hired staff
to Article 18, a treasured achievement of employee protection law.
Other trade unions, which form part of a substantial
unionised workforce of 12 million, or one Italian in five, have sounded a more
conciliatory note, however, and the unions failed to come up with a
common line on Monday. "An agreement is very possible," UIL labour leader Luigi
Angeletti said on Monday.
His price, however, remained a substantial climb-down by the
government on proposed changes to Article 18. "All that must be done is to
change the hard line," Angeletti told La Stampa newspaper, arguing the
changes had "absolutely nothing to do with the economy, with flexibility
or with job creation".
More than 30% of 18- to 24-year-olds are unemployed, and
only about 57% of Italians have a job, giving the country one of the lowest
employment rates in the eurozone and also among the slowest economic growth on
Monti must bolster estimates of the potential growth rate if
he is to convince markets that, in the long run, Italy can pay off its debt. So
far the former academic economist has been highly successful in turning around
Italy's benchmark bond yield has fallen to below 5% from
highs of close to 8% near the end of last year. But investors may start
changing their opinions if Monti fails to pull off the labour
market reforms he has promised.