(Reuters) - Italy's chamber of deputies approved modest labor reforms on Thursday after a difficult passage through parliament, underlining the challenges facing Prime Minister Matteo Renzi in his pledge to overhaul the economy.
The changes make it easier for firms to use temporary workers, reversing attempts by former Prime Minister Mario Monti to reduce the "duality" of a labor market divided between highly protected permanent workers and a growing army of temporary staff with virtually no rights or benefits.
The legislation, which was presented in March and has been the subject of persistent bickering and amendments by Renzi's broad left-right coalition, finally passed by 279 votes to 143.
Renzi had to resort to three votes of confidence to push it through parliament as a way of truncating debate and preventing further amendments.
He has pledged a much broader reform of the labor market in future months or years but has chosen an extremely slow parliamentary procedure, meaning it is unlikely to be approved before 2016 at the earliest.
Despite calls by the European Commission and other international bodies, Italy has struggled for years to substantially change its rigid labor rules which are partly blamed for unemployment of almost 13 percent and more than 40 percent among those below the age of 25.
Tito Boeri, a labor market expert and one of Italy's most prominent economists, said Renzi's labor decree was "a step backwards" because it increased the "duality" of the labor market and made no attempt to make permanent contracts more flexible.
"Monti failed to adequately reform permanent contracts but at least he tried, whereas this reform just gives up on that goal and that is very bad for a government that is supposed to be strong and determined," he said.
The decree makes it possible for firms to renew temporary contracts five times for up to three years without any pause between one contract and the next and without giving any reason for recourse to a temporary rather than a permanent contract.
Previously employers could not simply "roll over" temporary contracts and had to give a reason each time a new one was signed.
It also removes an obligation for firms to have at least 80 percent of permanent workers, so long as they pay a fine for each temporary worker exceeding the 20 percent ceiling, and it makes it easier for them to keep apprentices on their books without giving them jobs.
The decree only affects temporary contracts and makes no changes to wage bargaining, unemployment benefits or hiring and firing rules for workers on permanent contracts who still make up the vast majority of the labor force.
RESISTANCE
The modest nature of the labor decree, its difficult passage through parliament and Renzi's decision to put off the more substantial overhaul of the labor market that he had promised do not augur well for his broader reform plans.
The need for reform was underscored on Thursday when data showed the economy contracted in the first quarter, disappointing hopes of a strengthening recovery after a two-year-long recession.
In February, when the 39 year-old former mayor of Florence ousted party rival Enrico Letta to become prime minister, he promised to "revolutionize" Italy with a major reform each month.
However while there has been no let up in Renzi's energy or enthusiasm, he has had to come to terms with the difficulties of leading a fractious coalition which includes resistance from much of his own Democratic Party (PD).
Renzi's main achievement has been to push through a cut in income tax to boost the pay packets of low earners by up to 80 euros per month over the second half of this year, though many commentators have raised doubts over whether the measure is adequately funded.
His reform of the electoral system agreed with centre-right leader Silvio Berlusconi, which he said would pass by February, has become bogged down in parliament amid widespread opposition, with Berlusconi himself threatening to pull out of the accord.
His plan to abolish the upper house Senate as an elected chamber also faces wide opposition and an uncertain future.
The labor reform, scheduled for March, was far less ambitious than expected and presented as a kind of appetizer for a much broader "Jobs Act" that is eventually supposed to comprehensively overhaul regulation of the labor market.
Renzi says the Jobs Act will reform legislation covering permanent contracts and change the structure of unemployment benefits.
Yet the legislative vehicle chosen, by which parliament delegates powers to the government to draft measures which must then return to parliament for approval, is notoriously slow and often never completed.
For April, Renzi promised a sweeping reform of the public administration, which has yet to materialize, as Italy's political agenda has essentially been taken over by campaigning for this month's elections for the European Parliament.
reuters.com
The changes make it easier for firms to use temporary workers, reversing attempts by former Prime Minister Mario Monti to reduce the "duality" of a labor market divided between highly protected permanent workers and a growing army of temporary staff with virtually no rights or benefits.
The legislation, which was presented in March and has been the subject of persistent bickering and amendments by Renzi's broad left-right coalition, finally passed by 279 votes to 143.
Renzi had to resort to three votes of confidence to push it through parliament as a way of truncating debate and preventing further amendments.
He has pledged a much broader reform of the labor market in future months or years but has chosen an extremely slow parliamentary procedure, meaning it is unlikely to be approved before 2016 at the earliest.
Despite calls by the European Commission and other international bodies, Italy has struggled for years to substantially change its rigid labor rules which are partly blamed for unemployment of almost 13 percent and more than 40 percent among those below the age of 25.
Tito Boeri, a labor market expert and one of Italy's most prominent economists, said Renzi's labor decree was "a step backwards" because it increased the "duality" of the labor market and made no attempt to make permanent contracts more flexible.
"Monti failed to adequately reform permanent contracts but at least he tried, whereas this reform just gives up on that goal and that is very bad for a government that is supposed to be strong and determined," he said.
The decree makes it possible for firms to renew temporary contracts five times for up to three years without any pause between one contract and the next and without giving any reason for recourse to a temporary rather than a permanent contract.
Previously employers could not simply "roll over" temporary contracts and had to give a reason each time a new one was signed.
It also removes an obligation for firms to have at least 80 percent of permanent workers, so long as they pay a fine for each temporary worker exceeding the 20 percent ceiling, and it makes it easier for them to keep apprentices on their books without giving them jobs.
The decree only affects temporary contracts and makes no changes to wage bargaining, unemployment benefits or hiring and firing rules for workers on permanent contracts who still make up the vast majority of the labor force.
RESISTANCE
The modest nature of the labor decree, its difficult passage through parliament and Renzi's decision to put off the more substantial overhaul of the labor market that he had promised do not augur well for his broader reform plans.
The need for reform was underscored on Thursday when data showed the economy contracted in the first quarter, disappointing hopes of a strengthening recovery after a two-year-long recession.
In February, when the 39 year-old former mayor of Florence ousted party rival Enrico Letta to become prime minister, he promised to "revolutionize" Italy with a major reform each month.
However while there has been no let up in Renzi's energy or enthusiasm, he has had to come to terms with the difficulties of leading a fractious coalition which includes resistance from much of his own Democratic Party (PD).
Renzi's main achievement has been to push through a cut in income tax to boost the pay packets of low earners by up to 80 euros per month over the second half of this year, though many commentators have raised doubts over whether the measure is adequately funded.
His reform of the electoral system agreed with centre-right leader Silvio Berlusconi, which he said would pass by February, has become bogged down in parliament amid widespread opposition, with Berlusconi himself threatening to pull out of the accord.
His plan to abolish the upper house Senate as an elected chamber also faces wide opposition and an uncertain future.
The labor reform, scheduled for March, was far less ambitious than expected and presented as a kind of appetizer for a much broader "Jobs Act" that is eventually supposed to comprehensively overhaul regulation of the labor market.
Renzi says the Jobs Act will reform legislation covering permanent contracts and change the structure of unemployment benefits.
Yet the legislative vehicle chosen, by which parliament delegates powers to the government to draft measures which must then return to parliament for approval, is notoriously slow and often never completed.
For April, Renzi promised a sweeping reform of the public administration, which has yet to materialize, as Italy's political agenda has essentially been taken over by campaigning for this month's elections for the European Parliament.
reuters.com
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