Italy labour reform may be sealed next week

ROME: Italian Prime Minister Mario Monti is on track to seal a labour reform next week after the three big parties supporting him gave their backing to the changes, which are central to his plans to stimulate the debt-laden economy.

The parties supporting Monti's non-elected technocrat government said after a five-hour meeting that ended after midnight on Thursday that they hoped the reform would be accepted by trade unions and quickly passed by parliament.

However, Susanna Camusso, head of Italy's biggest union confederation, the CGIL, remained cautious on Friday, reflecting opposition from within her movement to any major changes.

"We will see what proposals will be made, but those we have heard so far from the government are not convincing and aren't acceptable," Camusso said on Friday in what may be a final negotiating ploy, analysts say.

Monti has called labour leaders and employers' groups to meet him on Tuesday to hammer out the final details of the reform. He said he wants a deal by the end of the month.

Labour Minister Elsa Fornero has been locked in often tense negotiations with the powerful labour unions for two months but the atmosphere suddenly improved earlier this week and Monti's entry into the talks is seen as a sign they are near a conclusion.

The government is pushing to energise Italy's economy by abolishing a "dual" labour market, which offers older workers cast-iron protection while giving no rights to thousands of mostly young people on temporary contracts.

A major stumbling block to agreement is the controversial article 18 of the labour statute, drawn up in 1970, which the government says needs to be amended but is fiercely defended by the CGIL.

This obliges firms with more than 15 employees to reinstate workers ruled by courts to have been wrongly dismissed, with full payment of lost salary.

The problem for companies is that Italy's snail-paced justice system often means that workers can be reinstated years after their dismissal with backdated pay.

Angelino Alfano, secretary of former prime minister Silvio Berlusconi's PDL party, Democratic Party chief Pier Luigi Bersani and centrist leader Pier Ferdinando Casini said after Thursday night's meeting that they agreed the labour trial process must be streamlined.

Analysts say reform is urgent if Italy is to improve its dismal levels of employment, productivity and growth, which has lagged the euro zone average for more than a decade.

Fewer Italians work as a proportion of the population than in any other euro zone country except Malta, and Monti said labour reform was one of his top priorities in his maiden speech in parliament in November.