UPDATE 2-Italy's Enel agrees early retirement for 3,500 - source

Fri May 10, 2013 12:56pm EDT

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By Alberto Sisto

ROME, May 10 (Reuters) - Italian power company Enel has reached a deal on early retirement for almost 10 percent of its domestic workforce, the largest agreement of its kind since the government overhauled Italy's pension rules, a labour union source said.

Italian oil and gas group Eni also said on Friday it was considering a similar deal that would see 1,000 employees take early retirement out of its domestic workforce of around 33,000, but had not yet taken a final decision.

With the Italian economy in its longest recession since World War Two, Enel has suffered a steep decline in demand for gas and electricity at home and is now looking to newer markets such as Latin America for growth.

The country's biggest electricity provider will make up pension contributions and cover extra costs imposed on 3,500 workers taking voluntary early retirement under legislation passed last year by the government of former Prime Minister Mario Monti.

"It's the first time such a large number of people make use of this new law," the union source said on Friday.

Enel shares gained 0.8 percent at 2.95 euros on Friday. An index of European utility companies rose 0.4 percent.

Power consumption has been hit hard by the crisis in Italy, which was underlined on Friday by a 0.8 percent fall in industrial production figures for March, pointing to a bleak reading for first quarter gross domestic product data next week.

The new pensions law raises the retirement age to ensure the state pension system is not blown apart by an ageing population. It allows workers to leave on a full pension within four years of the normal retirement age as long as they have paid contributions for the necessary minimum number of years.

The new regulations impose several restrictions and additional costs on early retirement agreements but the accords can be more attractive to both companies and workers than redundancies.

Enel, in which the state holds a controlling 31 percent stake, has been reluctant to impose redundancies on its 36,000-strong Italian workforce but has long encouraged older workers to leave early under individual early retirement deals.

More than a quarter of all terminations in the company's global workforce of around 74,000 last year were in Italy, with most of these due to voluntary early retirement, according to the company's 2012 annual report.

As part of the new agreement, Enel expects to hire around 1,500 younger workers under new labour market provisions intended to encourage apprenticeships, according to a company source.

The new pension rules impose penalties on workers who leave before they reach 62. But these can be made up by the company, which can also cover pension contributions for departing workers during the gap up to their normal retirement age to ensure they get a full pension.

Under the agreement reached with Enel's unions, which still requires approval from the Labour Ministry, Enel will make up the additional costs for the departing workers and provide other incentives including health benefits. (Writing by James Mackenzie; Editing by Tom Pfeiffer and Mark Potter)

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