Monti pushes for swift deal on labor reform

Reuters News
Posted: Apr 04, 2012 9:34 AM
Monti pushes for swift deal on labor reform

By Alberto Sisto

MILAN (Reuters) - Italian Prime Minister Mario Monti called on Wednesday for his proposed labor reforms to be passed swiftly as he prepared for a parliamentary campaign to pass measures that would make it easier for companies to fire employees.

Monti held what officials described as a "positive meeting" with the leaders of the centre-right PDL and the centre-left PD parties, and was due to outline the measures at a news conference at 1400 GMT.

No details were available about any last-minute changes to the plans, which have prompted strong opposition from the CGIL, Italy's biggest union, but employers lobby Confindustria said it was "very worried" about signs the accord may be watered down.

Sources close to the discussions said amendments to the original proposals could see more onus placed on companies to justify layoffs, and more scope given to judges to order the reinstatement of workers deemed to have been wrongly dismissed.

The government spent several months negotiating with employers, labor unions and parties over the initial agreement, which was then slammed by the CGIL, which said it would lead to an avalanche of layoffs.

Analysts and investors are following the technocrat government's progress in passing the labor market changes closely because they are seen as crucial to efforts to create a new model for economic growth in Italy.

The CGIL has pledged a campaign of industrial action including a one-day general strike against the proposals, which Monti says are needed to bring more flexibility to Italy's rigid labor market.

In an interview published in la Stampa newspaper on Wednesday, Monti warned politicians that labor reforms must be passed quickly if they are to convince creditors the country is serious about changing the shape of its economy and putting its public finances straight.

Monti is expected to send a bill to parliament this week but the law is not expected to be passed for some months.


Attention has focused on Article 18 of the labor code, which severely restricts the ability of companies to lay off workers on permanent contracts and which Monti says has discouraged companies from taking on staff.

The CGIL and critics on the left say the proposed changes will do nothing to encourage new hiring and will leave large numbers of mainly younger workers stuck on dead-end short term contracts offering few prospects or benefits.

The proposals announced so far include measures that would ease firing restrictions for companies that need to get rid of single employees for business reasons, something which companies are effectively prevented from doing under current legislation.

It would also beef up increased unemployment benefits, and make it more expensive for companies to offer only short-term contracts.

In Wednesday's newspaper interview, Monti said his labor reform proposals would be presented to parliament in essentially the same form as they were approved in cabinet last month.

According to a political source close to the government, Monti has agreed to partially roll back a measure that eased firing for business reasons.

In contrast to the original proposal, a worker fired for business reasons may be reinstated if unjustly laid off and it will be up to a judge to decide, the source said.

He called on leaders of the centre-right PDL and the centre-left Democratic Party (PD), which support him in parliament, to pass it rapidly because it would give an important signal to bond markets, still nervous about Italy's capacity to pass economic reforms needed to stimulate growth.

"For the overall impact of the reform, it is not just the contents which are important but also the speed with which parliament undertakes the examination it has to," he told the newspaper.

He addressed a particular appeal to PD leader Pier Luigi Bersani, who opposes key parts of the reform, alongside the CGIL, a traditional ally of the left.

"We consider that the time for consultation with social partners is over, we know that every party has its hinterland in terms of partners and culture, but I think that every leader will have to use his capacity for leadership," he said.

In the interview, Monti also said that a right-left coalition like the one that supports him in parliament might be a good solution for Italy after next year's national elections.

"If the situation still requires it, then I imagine that (the parties) will be willing to take advantage of their heightened ability to dialogue and to think of broad solutions, grand coalitions," Monti said.

(Reporting by Michel Rose, James Mackenzie and Steve Scherer; editing by Maria Golovnina)