UPDATE 3-Renzi slows reform pledge frenzy as criticism mounts

Wed Sep 3, 2014 12:34pm EDT

* Renzi outlines schools vision, plans reform for January 2015

* PM faces mounting criticism over slow pace of promised reform

* Says Eni, Enel stake sales not a priority

* Says spending cut chief has asked to leave job (Writes through with education plans, quotes, detail, background)

By Isla Binnie

ROME, Sept 3 (Reuters) - Prime Minister Matteo Renzi outlined his plan for improving Italy's sub-standard schools on Wednesday but delayed any legislation on the issue until next year, amid growing calls for him to live up to his ambitious reform pledges.

Renzi, who continues to have high opinion poll ratings, also said he was in no rush to complete long-awaited sales in state-owned stakes in energy companies Eni and Enel .

Last week, a so-called "Unblock Italy" decree aimed at encouraging investments he revealed was almost unanimously panned by Italian media as inadequate and Renzi has responded by scaling back his rhetoric of promises.

Having taken office in February promising to "revolutionise" Italy with a major reform a month, he has changed tack and branded his latest 1,000-day reform plan "One step at a time".

Renzi had been due last Friday to unveil an overhaul of Italy's schools, which despite improving in recent years perform below the OECD average, but suddenly took it off the day's agenda, which he said was too full.

On Wednesday the 39-year-old prime minister pledged in a video on a government website to hire almost 150,000 teachers and make the system meritocratic, but said the rules would not be changed until January when "we are going to get serious".

Confidence in the fast-talking Florentine has been shaken as the economy slipped into a triple-dip recession. Financial daily Il Sole 24 Ore asked Renzi in an interview on Wednesday whether he felt bound to enforce a reform of the labour market, rather than just announce it.

Italy, whose public debt is the second highest in the euro zone as a percentage of gross domestic product, has delayed a slew of asset sales planned by former premier Enrico Letta last year, due to market volatility.

Renzi told Il Sole he aimed to meet the privatisation revenue targets but was in no rush to sell stakes in energy companies Eni and Enel, which were due to raise some 5 billion euros (6.57 billion) by the end of 2014.

"I don't see it as a priority to reduce state-owned stakes in two companies (Eni and Enel) that have a great potential, whose share price could rise further," Renzi said.

The Treasury had hoped to raise about 11 billion euros in all, equal to 0.7 percent of Italy's 1.6 trillion euro GDP, selling stakes in firms including post office operator Poste Italiane.

Renzi repeated that he would carry out the reforms he plans and said he could use progress to persuade the European Union to give Italy more time to reduce its public debt, the second highest in the euro zone relative to economic output.

"If we pass reforms, and as I have said before, we will, we can have more time to bring our debt down," said Renzi, whose country holds the 6-month rotating presidency of the EU.

"ONE STEP AT A TIME"

The government does not plan to take additional budget measures this year, or extraordinary actions to cut its 2-trillion-euro public debt, Il Sole quoted Renzi as saying.

Falling debt servicing costs due to lower government bond yields would help keep the budget deficit inside the EU's 3 percent of gross domestic product limit this year, Renzi said, and pledged to slash spending next year by 20 billion euros.

He said former International Monetary Fund official Carlo Cottarelli, hired by Letta to identify spending cuts, had asked to leave his job after less than a year to return to the IMF.

Renzi, who has neither adopted nor supported many of Cottarelli's ideas, said he still had faith in the economist and had asked him to stay on, but did not know if he would do so.

The former mayor of Florence said he would ask each ministry to cut its budget by 3 percent, the kind of across-the-board spending cuts Italy has traditionally adopted and which Cottarelli was brought in to change.

The education plans, which would permanently hire many of the army of short-term and supply teachers Italy's schools depend upon and scrap a system of promoting teachers based on age not merit, received cautious approval from teachers' unions.

"Our first assessment is positive, now we need to check if the plans are feasible," said Francesco Scrima, secretary of the Cisl Scuola union, after an initial reading of the plans, which set aside 3 billion euros ($3.94 billion) for the hirings.

Italy spends 4.3 percent of gross domestic product on education, less than all its main competitors in the euro zone, and has long struggled to produce a workforce qualified to prosper in a globalised economy.

(1 US dollar = 0.7607 euro) (Writing by Francesca Landini and Gavin Jones; Editing by Susan Fenton and Raissa Kasolowsky)

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