* Monti presses unions for deal to loosen job protection
* Says deadline for reform is end-month
* Government wants backing to reform two-tier labour market
* Key hurdle is symbolic article 18 in labour statute
By Steve Scherer and Francesca Piscioneri
ROME, March 20 Prime Minister Mario Monti began
a final push on Tuesday to forge a deal with trade unions on
labour reform that marks a crucial test of his ability to revive
Italy's chronically uncompetitive economy.
The former European Commissioner opened informal discussions
ahead of a meeting at 1500 GMT to try to agree on how to ease
stringent legal protection for workers that dates back to the
1970s high-water mark of trade union power.
The rules, which protect workers in larger companies from
being sacked, have been fiercely defended by labour leaders but
are also blamed for Italy's painfully low employment rate and
years of stagnant growth.
A deal on labour reforms will determine whether Monti can
push through the kind of far-reaching changes to the economy
needed to restore growth and reduce Italy's crippling burden of
Monti met the leaders of the leftwing CGIL union
confederation as well as the more moderate CISL and UIL, while
Labour Minister Elsa Fornero held separate talks at a technical
level on welfare measures and job contracts.
The technocrat government is aiming for a deal by the end of
the week, but has pledged to defy the unions and push the
reforms through parliament if they cannot reach agreement.
Appointed in November as financial market turmoil threatened
to suck Italy into a Greek-style debt crisis, Monti has already
moved to shore up public finances through a mix of spending
cuts, tax hikes and a major overhaul of the pension system.
Late on Monday, influential President Giorgio Napolitano
called on unions and employers to reach a deal in the interests
of the country.
Failure to persuade union leaders, who fear they may have
already given too much away in an atmosphere of national
emergency, could unleash strikes and dissent within the grand
coalition of parties supporting Monti in parliament.
The labour rules have been blamed for creating a two-tier
system familiar across southern Europe, where older staff
monopolise protected positions and the young are either left
unemployed or stranded in precarious short-term contracts.
"We're running the last mile," said Corrado Passera, the
banker Monti brought into government in November as industry
minister. "An agreement is within reach," he told reporters in
remarks that are at odds with signals coming from some unions.
TWO-TIER LABOUR MARKET
The standoff between the government and unions has focused
on Article 18 of the labour law, a provision which makes it
difficult to fire workers in companies with more than 15
employees for all but the grossest of misconduct.
Monti has conceded that the rules will not change for
workers already in employment, but wants to create a different
system for new hires.
The three main confederations, which represent a substantial
part of Italy's 12 million-strong union membership, are divided.
The CGIL, the largest group, is taking a harder line than the
more moderate CSIL and UIL.
"An agreement is very possible," UIL leader Luigi Angeletti
said on Monday, although he stuck to his demand that the
government drop proposed changes which would let employers sack
workers for under-performance.
In a sign of the kind of resistance Monti is facing, the
metal-workers arm of the CGIL called its members to down tools
for two hours of their own choosing during Tuesday in protest
against the proposed changes.
The discussions are being watched closely by financial
markets, which have been reassured by Monti's first months in
government, but remain nervous about growth prospects in the
troubled euro zone.
More than 30 percent of 18- to 24-year olds in Italy are
unemployed, and only about 57 percent of Italians have a job,
giving the country one of the lowest employment rates in the
euro zone. It also has some of the slowest growth on the
Monti must bolster growth if he is to convince markets that
Italy can pay off its huge debt, which amounts to around 120
percent of gross domestic product.
Italy's benchmark bond yield has fallen to below 5 percent
from highs of close to 8 percent near the end of last year. But
investors may start changing their view if Monti fails to pull
off the labour reforms he has promised.