By Gavin Jones and Daniele Mari
ROME (Reuters) - Italy's largest trade union is expected to outline on Wednesday how it will try to stop a reform making it easier to fire workers that Prime Minister Mario Monti says is vital for getting the economy back on track.
Monti is pushing ahead with the deep overhaul of job protection laws after failing to reach a deal in talks with unions and employers on Tuesday despite the promise from the left-wing CGIL union to do everything to block the change.
Bosses complain Italy's labor laws make it hard to get rid of workers, discouraging hiring and foreign investment. The reform is seen as a test of Monti's ability to shakeup the economy and convince markets that Italy will not become a victim of the euro zone debt crisis.
CGIL leader Susanna Cammusso has called the changes an attack on workers through "easy firing". She will hold a news conference at 1400 GMT after meeting her union colleagues to decide how to react.
Monti said he is worried by CGIL's opposition but was no longer willing to negotiate with them as he had the broad support of employers and the more moderate CISL and UIL unions.
"It's quite a profound change because it affects pretty much all issues relating to the labor market," Marco Venturi, head of the small business association Rete Imprese told Canale 5 television. "It was a long, drawn out discussion which ended with a conclusion which I think is quite satisfactory."
The reform plan unveiled on Tuesday went further than expected by weakening protections against dismissal provided not only in new employment contracts, as expected, but also for millions of people already in jobs.
The key reform to Article 18 of the labor code, a talisman for the unions of achievements they secured from bosses 40 years ago, will be presented to parliament after some minor fine-tuning during the rest of this week.
Employers say the law has led to a two-tier labor market, where established employees in companies with more than 15 workers are protected for life by powerful contracts and younger Italians and those in small firms are condemned to spend years either out of work or on precarious temporary contracts.
The parliamentary process presents another challenge for Monti. The centre-left Democrat party, one of the main groupings he needs for his majority, has strong ties with the CGIL and risks a split between its more centrist and leftist wings.
STRIKES AND PROTESTS
Camusso has accused Monti's technocratic administration of bad faith and not having been serious in the negotiations.
"We will mobilize, we will do everything necessary to counter this reform," she said.
That is almost certain to mean strikes and mass demonstrations of a kind Monti has so far been spared as he has ridden a wave of concern about economic crisis which has muted protests against change.
While the reforms do not go as far as some labor experts had urged, if Monti is successful it will bolster confidence in his ability to push through the kind of far-reaching changes that are needed to restore growth and reduce Italy's crippling burden of public debt and bring down high unemployment.
Appointed in November as financial market turmoil threatened to suck Italy into a Greek-style debt crisis, Monti has already moved to shore up public finances through a mix of spending cuts, tax hikes and an overhaul of the pension system.
The labor reform discussions are being watched closely by financial markets, which have been reassured by Monti's first months in government, but remain nervous about growth prospects in the troubled euro zone.
More than 30 percent of 18- to 24-year olds in Italy are unemployed, and only about 57 percent of Italians have a job, giving the country one of the lowest employment rates in the euro zone.
Italy's economy is expected to contract by 1.5 percent in 2012, according to forecasts from the Bank of Italy undermining hopes of cutting a public debt burden that amounts to 120 percent of gross domestic product, second only to Greece in the euro zone.
Italy's benchmark bond yield has fallen to below 5 percent from perilous highs of close to 8 percent near the end of last year. But investors may start changing their view if Monti fails to pull off the labor reforms he has promised.
(Editing by Anna Willard)