Italian unions uneasy over economic rescue plan

AP News
Posted: Dec 01, 2011 4:14 PM
Italian unions uneasy over economic rescue plan

The Italian government's financial rescue plan is yet to be finalized, but already labor unions are denouncing it and some politicians are suggesting they might not back all the anticipated harsh measures meant to save the country from bankruptcy.

Unions seem particularly galled that Premier Mario Monti, in his rush to reassure markets about Italy's ability to rein in its debt and spur growth, is doing away with the government's traditional negotiations with them over any change to labor regulations or pensions.

But in a bid to ease tensions, Monti's office late Thursday issued a statement that he will meet with various segments of society, including unions, the major industrial lobby and local governments, Sunday morning "with a goal of illustrating the guiding principals of the measures that will be adopted by the Cabinet on Monday."

Monti told reporters Wednesday in Brussels that time constraints and the "extraordinary delicate situation" Italy is struggling through doesn't allow for "certain rituals that might be welcome by everyone, but perhaps aren't advantageous to the country."

In the past, such negotiations with unions have frequently blocked major overhauls of Italy's generous pension system.

Monti promised that his Cabinet on Monday would approve a package of spending cuts to slash towering debt and structural reforms to spur growth. He called for a "collective sense of urgency and responsibility" among lawmakers to facilitate passage in Parliament.

The new premier is under tremendous pressure to rein in Italy's euro1.9 trillion ($2.6 trillion) debt load _ 20 percent larger than its annual economic output. The country, which is the eurozone's third-largest economy, is considered to be too big to be bailed out.

An Italian default would be disastrous for the 17-member eurozone and reverberate throughout the global economy.

Susanna Camusso, head of Italy's largest labor confederation, the left-leaning Cgil, has demanded a meeting with the government before the Cabinet clears the new measures.

News reports suggest Monti's plan includes a proposal to add add at least one year to the 40 years now required in social security tax contributions before a worker is entitled to retire.

"The government must know that 40 is the magic, untouchable number," Camusso said.

The center-left Democratic Party is also skeptical about what might be proposed, arguing that flexibility must be built into the system to account for different types of labor and the age at which someone started working.

"Such a drastic intervention on this front seems like an error," said Democratic lawmaker Paolo Baretta in an interview with Rome daily Il Messaggero.

The leader of the center-left Democratic Party, however, said its main concern is that the burden of sacrifice be shared equally. "He who has more must give more," said Pierluigi Bersani.

Monti has said as much in describing the three pillars of his reform: budgetary rigor, economic growth, and social fairness.

Silvio Berlusconi, who was forced to resign as premier because markets lost confidence in his ability to push through reforms, huddled with his allies into the early hours of Thursday to map strategy. His conservative allies fear a rumored special tax on wealth and the return of a home property tax.

"We're ready to do our part to support Monti's government to get out of the crisis," said Maria Stella Gelmini, Berlusconi's former education minister and a member of his People of Freedom Party. But she said the party told Monti they were "perplexed" about the proposed taxes.

The unelected Monti, who was tapped by Italy's president to lead the country out of the crisis, needs lawmakers' support for his rescue plan. In an indication that he knows that too well, he congratulated the lower Chamber of Deputies on Thursday for having approved _ by a "vast margin" _ the first reading of a months-long legislative process to amend the nation's constitution to require a balanced state budget.

He said the support showed "the firm will of Parliament and the whole country to follow the path of structural health in public finance." In a statement, he said such political will, at the national and EU level, will be a "decisive element to overcome the current difficult financial crisis that has seized Europe."