Italians want to cut debt but without sacrifices

[November 23, 2011]  ROME (AP) -- Few Italians are willing to make personal sacrifices -- like retiring at age 67 instead of 65, or even earlier -- though they believe cutting the country's public debt is a top priority, according to an AP-GfK poll released Tuesday.

And most Italians think the country should stay in the 17-nation eurozone even though the European Union is demanding such tough economic reforms.

A full 93 percent of Italians said reducing the public debt was either an "extremely" or "very important" goal for the government to tackle. Only 2 percent said it was "not too important" or "not at all important."

Yet, only about a quarter of Italians favor reforming labor laws to make it easier to fire workers, or raising the retirement age -- considered critical to curb Italy's public spending and boost economic growth.

Italy has been engulfed in financial turmoil for weeks as markets woke up to the enormous size of its debt -- euro1.9 trillion ($2.6 trillion), a eurozone high at 120 percent of gross domestic product. The market turmoil and a loss of confidence in Italy's ability to repay its debt forced Premier Silvio Berlusconi to resign Nov. 12, ending his 17-year domination of Italian politics.

The AP-GfK poll was conducted last week during the first days of economist Mario Monti's new government, made up of bankers, academics and corporate executives instead of politicians. Monti is under enormous pressure to quickly rein in the debt and get the economy growing again.

Italy's economy is hampered by high labor costs, low productivity, fat government payrolls, excessive taxes, choking bureaucracy and low numbers of college graduates. Yet as the third-largest economy in the eurozone, Italy is too big for Europe to bail out like it did Greece, Portugal and Ireland.

Monti got high marks from the Italians surveyed, with 67 percent saying they viewed him favorably. Only 10 percent had a negative view and 16 percent were neutral.

"Let's say there's hope," said Fortunato Porcheddu, 63, as he strolled Tuesday with a friend through a piazza in Rome. "If I close my eyes and look back over the past 15 years and everything that has happened, I cringe."

Monti has pledged to reform Italy's pension system, re-impose a property tax annulled by Berlusconi's government, fight tax evasion, streamline civil court proceedings, get more women and young people into the work force and cut political costs.

But, critically, only 32 percent of Italians surveyed are strongly confident that his technocratic government can fix the country's economic ills. Forty-two percent say they're "moderately confident" and 22 percent say they have little or no confidence he can turn Italy's finances around.

While there is some hopefulness about the future of the economy -- 55 percent anticipate a better situation five years from now -- the longer-term picture is gloomier. Only 35 percent of Italians think people will be better off in 20 years than they are today, while 43 percent anticipate a harder life for the next generation.

"Our generation always looked forward with the possibility of improvement," said Alfonso Marozzi, 72. "Now, young people are resigned to wonder if they'll be able to hold onto what their parents were able to build. There's a lack of hope in the future."

The survey found that Italians are especially concerned about corruption: 87 percent called it an "extremely" or "very serious" problem. Unemployment, the debt and organized crime followed.

Monti is expected to seek more reforms to the pension system and to try to make the contribution system more equitable. Currently, some Italian women can retire at 60, while a standard retirement age for men is 65.

Only 26 percent of those surveyed favored raising the retirement age to 67 to help cut spending, while 67 percent were opposed. Parliament recently passed legislation raising the retirement age to 67 starting in 2026 and to 70 by 2050, but critics say the reforms are meaningless because any savings are too far in the future.

Italian politicians have made few efforts to reform the labor market, and the AP-Gfk poll shows why. Seventy percent of respondents opposed deregulating the labor market to make it easier to fire workers, with only 22 percent favoring it. Of the 70 percent opposed, a full 56 percent were "strongly opposed."

Even though the EU is demanding such tough economic reforms, 52 percent of Italians still view it favorably and 76 percent think Italy should stay in the 17-nation eurozone.

Ultimately, labor market reforms are likely to be much broader than just changes involving firing. Monti's government is expected to open up "closed professions," such as lawyers, notaries and taxi drivers, which in some cases restrict entry to people with connections or set standard prices that deprive the market of competition.

Monti also plans to loosen Italy's system of collective bargaining, in which unions negotiate with entire industries rather than individual companies. Italy's biggest carmaker, Fiat, told unions Monday that it's tossing out the old model as of Jan. 1 and will negotiate new contracts plant by plant -- something it has already done in four locations.

Raj Badiani, an economist at IHS Global Insight in London, said Fiat "is probably the forerunner of what we need to see." But he cautioned: "Trade union opposition to that will be immense."

Unions have balked at any labor market reforms, and so far the austerity measures that have been passed by Parliament haven't touched the thorny issue.

Still, the AP-GfK survey found that labor unions in general get broadly negative ratings from Italians, with 53 percent of respondents saying they "only sometimes" or "never" trust unions to do the right thing.

Only 20 percent of Italians surveyed had a favorable opinion of Berlusconi, with 67 percent having an unfavorable view and 56 having a "strongly unfavorable" impression of the billionaire media mogul.

Armando Manni, a 50-year-old who tends olive groves in Tuscany, said young Italians have to become more like their Anglo-Saxon peers and leave home to pursue their dreams rather than stay where their mothers cook, clean and wash their clothes until they're well past age 40.

"A country that doesn't have dreams is a country that is almost dead," he said as he shopped for tomatoes.

The AP-GfK poll of 1,025 Italian adults across the country was conducted Nov. 16-20 using landline and cell phones by GfK Eurisko Italy under direction of the global GfK Group. It had a margin of error of plus or minus 3.3 percentage points.

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Online:

AP Poll: http://www.ap-gfkpoll.com/ 

[Associated Press; By NICOLE WINFIELD]

Jennifer Agiesta in Washington, Paolo Santalucia in Rome and Colleen Barry in Milan contributed.

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