UPDATE 3-Italy's Monti makes concession on labour reform

Wed Apr 4, 2012 1:58pm EDT

Related Topics

* Monti makes concession to speed up reform

* Big political parties give backing

* Biggest union reserves judgment

By Alberto Sisto

ROME, April 4 (Reuters) - Italian Prime Minister Mario Monti made concessions to unions and a major centre-left party on Wednesday in a bid to ensure swift approval in parliament of labour reforms that would make it easier to fire workers.

Monti and Labour Minister Elsa Fornero said the revised proposals would allow courts to order the reinstatement of workers laid off for business reasons where the justification was "manifestly non-existent".

However, they said the concession would not change the basic principle of the reform, which is intended to encourage hiring by companies currently held back by the fear that they will not be able to shed staff when business conditions warrant.

"We can no longer say that, once you have a job, it's yours forever," Fornero told a news conference.

Monti said leaders of the coalition of parties backing his technocrat government in parliament had agreed to the changes. This should ensure smooth approval of a reform widely seen as an indicator of his ability to revive Italy's stagnant economy.

"We think we've found a point of equilibrium," Monti said, adding that he hoped the parliamentary process would be "thorough but also rapid".

Monti's original plan infuriated the CGIL, Italy's biggest union, and was rejected by the centre-left Democratic Party (PD), the second biggest group supporting him in parliament.

The CGIL said it would not comment until it saw a written proposal. But Raffaele Bonnani, leader of the moderate CISL union, said that "the issue that worried us the most has been settled in a reasonable manner".

Democratic Party leader Pier Luigi Bersani told state television: "I think that my party and our supporters and citizens in general will be satisfied with this change."

After a four-month honeymoon following his appointment to avert a Greek-style debt crisis in November, Monti has run into bitter opposition over reforms and tough budget cuts.

HONEYMOON OVER

In a sign of how different the climate has become since Monti first replaced the scandal-plagued Silvio Berlusconi, the head of one of the main opposition parties blamed him for a wave of suicides attributed to the economic crisis.

Monti refused to comment on the accusation.

Markets have been closely following the labour reforms, seen as a symbol of Monti's capacity to push through unpopular changes to an economy that has been among the most sluggish in the euro zone for more than a decade.

Attention has focused on a battle over Article 18 of the labour code, a provision dating from the height of union power in 1970 that makes it hard for firms to fire individuals.

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.

"Article 18 was a great conquest, but the world has changed," Fornero said.

Monti said the measures would increase "exit flexibility", a term used to describe the ease with which companies can fire employees, while protecting workers against unjustifed dismissal and limiting the scope of judges to interfere in management.

He urged the PD and Berlusconi's centre-right PDL, his biggest parliamentary supporter, to pass the reform rapidly because it would give a signal to bond markets still nervous about Italy's ability to implement reforms that boost growth.

"For the overall impact of the reform, it is not just the contents that are important but also the speed with which parliament undertakes the necessary examination," he told the daily La Stampa.

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 election.

"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.

FILED UNDER:
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article