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NEWSMAKER-Italian economy minister is respected, but new to politics
February 21, 2014 / 7:26 PM / 4 years ago

NEWSMAKER-Italian economy minister is respected, but new to politics

* OECD chief economist picked by Italy’s Renzi

* Padoan to be 4th technocrat in a row at economy ministry

* Renzi has pledged immediate reforms to labour, tax systems

By Steve Scherer

ROME, Feb 21 (Reuters) - With Pier Carlo Padoan, an internationally respected economist with no experience in frontline politics, Italy is continuing the recent tradition of having technocrats run the economy ministry.

Like his predecessor, Bank of Italy official Fabrizio Saccomanni, Padoan, chief economist at the Paris-based Organisation for Economic Cooperation and Development, will serve as one of the main contacts with the European Central Bank and the wider European Union.

But he will remain inescapably in the shadow of the ambitious prime minister-in-waiting, Matteo Renzi, who opted against installing a political heavyweight with experience in running the sprawling ministry which oversees the euro zone’s third-largest economy.

With Italy struggling to emerge from recession and shake off unemployment at levels last seen in the 1970s, Padoan will have to help implement and sell an ambitious agenda that includes reforms to the labour market, tax system and public administration within the next four months.

Before joining the OECD in 2007, Padoan, now in his 60s, worked at the International Monetary Fund, and from 1998 to 2011 was an advisor to two centre-left prime ministers, Massimo D‘Alema and Giuliano Amato.

As head of the OECD’s economics department, Padoan has called for aggressive easing from the ECB and was an early critic of tough budget cuts in the euro zone’s weakest economies as they struggled with excessive debt.

He has backed Renzi’s calls for better training and cuts to Italy’s high labour costs and has also made comments that chime with the prime minister-designate’s calls for strict EU budget rules to be eased to encourage growth and allow more investment in infrastructure.

“I recommend a golden rule that allows euro zone countries to exclude from the calculation of the budget deficit public spending aimed at creating new jobs,” Padoan said in June.

Although the financial market turbulence which almost forced Italy out of the euro in 2011 has eased, memories of the crisis remain raw and his hefty international profile should serve him well to soothe international investors and partners.

Padoan has made regular visits to Brussels to testify on various aspects of the 28-member EU economy, and he has served as the OECD representative at the G-20, including at this week’s meeting in Sydney.

But his three predecessors - Mario Monti, Vittorio Grilli and Fabrizio Saccomanni - struggled as technocrat ministers in the highly politicised corridors of Rome.

At the end of last year, Italy barely returned to growth after struggling through its worst recession since World War Two in which hundreds of thousands of companies have gone out of business and youth joblessness has risen above 40 percent.

The country has been one of the worst performers in the euro zone since its creation more than a decade ago, and it is saddled with an enormous public debt. At 2 trillion euros ($2.74 trillion), it is more than 130 percent of total annual economic output.

The government will be sworn in on Saturday at 11:30 a.m. (1030 GMT) and is expected to face its first confidence vote in parliament on Monday.

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