Monti labor reform plans come under fire in Italy

ROME Thu Apr 5, 2012 1:01pm EDT

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ROME (Reuters) - Italian Prime Minister Mario Monti faced a revolt on Thursday by unions, employers and PDL, the main centre-right party, who all demanded changes to labor proposals aimed at making it easier for companies to fire workers.

The battle over reforms to Italy's rigid system of labor contracts has dominated Monti's agenda this year and provided his first major political battle since he replaced the scandal-plagued Silvio Berlusconi in November.

Monti watered down his original labor plans on Wednesday, agreeing to give courts the power to order employees to be reinstated when the business reasons used to justify a dismissal were deemed "manifestly inexistent".

Speaking during a visit to Naples on Thursday, Monti said reinstatement would occur only in "very extreme and improbable" circumstances.

CGIL, Italy's biggest union, said the change was welcome but not enough for it to abandon its plans for industrial action.

It said it would push ahead with 16 hours of work stoppages including a day-long general strike and called on the government to pass more measures to help stimulate growth. The UIL metalworkers union also confirmed plans to strike.

The job protection measures are part of a package aimed at overhauling a system that offers broad protection to workers on permanent contracts but leaves growing numbers of mainly younger workers in insecure, short-term jobs.

Current rules make it very difficult for companies with more than 15 workers to sack individual employees for reasons other than gross misconduct.

The government says employers and investors are held back from taking on new workers by the fear that they will not be able to cut staff numbers if business conditions deteriorate.

Unions have been angered by what they see as an attack on worker's rights. Meanwhile employers groups and centre-right politicians have been irritated by concessions given to unions and say more needs to be done to protect companies from extra costs.

Confindustria, the main employers' federation, attacked the change to the reforms announced on Wednesday, which its vice president Alberto Bombassei said "profoundly disappointed the expectations of the business world".

Monti said on Wednesday he had cross-party support for the revised proposals following a meeting with the leaders of the two main parties which back his technocrat government in parliament. But the agreement appeared to be fraying a day later.

The centre-left Democratic Party (PD) welcomed the compromise but senior parliamentary leaders in the conservative People of Freedom (PDL) party declared they would not support the measure without further changes.

The PDL's parliamentary leaders, Maurizio Gasparri in the Senate and Fabrizio Cicchito in the lower house, said the party would demand further changes before they agreed to vote for the bill, which will go before parliament after the Easter break.

(Additional reporting by Laura Viggiano; Writing by James Mackenzie; Editing by Andrew Heavens)