* Swedish appliance maker planning steep cuts to labour
* Unions call on government to act as questions raised over
* Electrolux latest in series of foreign employers to see
problems in Italy
By Francesca Piscioneri
ROME, Jan 30 Prime Minister Enrico Letta pledged
on Thursday to do everything possible to ensure Electrolux
maintained production in Italy following uncertainty
over the future of the Swedish appliance maker's local plants.
Electrolux AB, facing growing cost pressure from cheaper
locations in eastern Europe, is planning steep cuts to wages and
benefits for its 5,700 workers in Italy and unions fear it may
also close a washing machine plant in Porcia, employing 1,200.
The company has not made full details of its plans public or
confirmed plans to close the plant. It says the cuts, made up of
a mixture of reductions to working hours and benefits, would
amount to around 8 percent or some 130 euros ($180) a month for
a typical worker but unions say the impact would be more severe.
The UILM union estimates that a typical worker with a gross
salary of under 2,000 euros would be 18 percent worse off.
Electrolux managers have held a series of meetings with
unions and government officials to discuss their plans for
reorganising production, with another meeting between all three
groups scheduled for Feb. 17.
But Industry Minister Flavio Zanonato said this week the
plans were "not convincing" and concern remained over the future
of the plant in Porcia, north of Venice, the largest of four
sites in northern Italy.
Concerned at the prospect of losing one more foreign
industrial employer while unemployment is at its highest level
since at least the 1970s, the government has vowed to help find
"We will not raise the white flag. This type of production
must continue in Italy," Letta told a conference of European
industry ministers in Rome. He said he would do "everything to
convince the company."
However its scope to intervene is limited by efforts to rein
in the deficit and cut public debt, the highest in the euro zone
The struggle over Electrolux underlines to dire state of the
electrical appliances sector in Italy, once a major producer of
white goods which has seen its output cut in half since 2006
under mounting pressure from lower cost locations.
The head of Italy's main business association Confindustria
wrote to Letta calling for urgent action to address problems
ranging from the high cost of labour and taxes to a rigid labour
market which the Electrolux case highlighted.
"Without a turnaround in this trend we will be heading
inevitably towards an industrial desert in our country and
Confidustria cannot accept this idea," Confindustria President
Giorgio Squinzi wrote.
Italy is still struggling to emerge from its longest postwar
recession and although the government is expecting a return to
growth in the last quarter of the year, the immediate impact on
unemployment is expected to be slight.
The most recent data showed headline unemployment running at
12.7 percent, the highest level since current records began 37
years ago, while the youth unemployment rate was running at more
than 41 percent.
The battle over Electrolux coincides with new centre-left
leader Matteo Renzi preparing to unveil a new Jobs Act intended
to simplify the complex system of employment contracts widely
blamed for deterring Italian employers from hiring new staff.
As well as burdensome and complicated bureaucracy, companies
have long complained of excessive costs in Italy, which has some
of the highest corporate taxes in the world.
Figures last year from the Organisation for Economic
Cooperation and Development showed the tax wedge in Italy - the
difference between what its costs a company to employ a worker
and the worker's take home pay - at 47.6 percent against an
average for the rest of the 34-member bloc of 35.6 percent.
($1 = 0.7373 euros)
(Writing by James Mackenzie, editing by David Evans)