ROME: Italy's economy needs a "legislative overhaul" to end 15 years of sluggish growth that have left young people with incomes below their levels in the 1980s, central bank governor Mario Draghi said on Saturday.
Draghi, a favourite to succeed Jean-Claude Trichet as head of the European Central Bank later this year, painted a stark picture of the state of the Italian economy where growth was a lower-than-expected 1.1 percent last year.
"In Italy, growth has been languishing for 15 years now the growth of the whole economy would benefit from a legislative overhaul," Draghi told a conference in northern Italy, according to a text distributed by organisers. He also called for "bolder reform measures" to help businesses.
"Despite the progress made, Italy still stands out in all the international rankings for the burdensomeness of its bureaucratic obligations, especially those incumbent on firms," he told financial market players.
"Our university system is still far from the standards of quality prevailing in most of the advanced countries," he said, adding: "Our research institutions are unable to attract talented scholars." "For over a decade the entry wages of young people in the labour market have been stuck below the levels of the 1980s in real terms.
The youth unemployment rate verges on 30 percent," he continued. Draghi said the division in the Italian labour market between precarious workers on one side and employees with a high degree of job security on the other "seriously impairs the efficiency of the productive economy.
"He also said Italian firms were too small to compete internationally, adding: "A tax system with less evasion and lower rates would be conducive to firms' decision to scale up and accept contributions of new equity capital." Draghi heads up the Financial Stability Board, which has been charged by the G20 group of leading world economies with overseeing global financial reforms. He is rumoured to have a tense relationship with Economy Minister Giulio Tremonti, who has however backed Draghi's bid for the European Central Bank.
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