Monti faces tough challenges in changing Italy

[May 16, 2012]   (AP) -- LABOR REFORMS: Premier Mario Monti is pushing big changes to labor law, including a much-contested measure making it easier to fire workers. The changes are aimed at encouraging foreign investment and helping companies take on younger workers. But resistance has already forced the government to water down the reforms.

NEW TAX ON FIRST HOMES: Monti wants to re-launch a property tax on first homes that was abolished by former Premier Silvio Berlusconi. The property tax would raise (EURO)11 billion ($14 billion) next year. But it's widely opposed in a country with 70 percent homeownership.

SPENDING REVIEW: Monti has ordered a review of government spending and solicited input from the public through the government's website to slash (EURO)4.2 billion ($5.2 billion). The majority of responses have been from government employees. But he'll face a fierce fight when he targets individual departments.

STREAMLINING BUREAUCRACY: Monti aims to simplify and downsize bureaucracy, in particular making it easier to open businesses by bringing the process online. But impact on growth is uncertain as hard times stifle entrepreneurship.

INVESTMENT IN THE SOUTH: Monti has announced (EURO)2.3 billion ($3 billion) in combined EU and government funds to invest in the impoverished south to help its development, including infrastructure projects, money for nursery schools and the elderly. But the south's problems have proven intractable and the funds may be largely wasted.

[Associated Press]

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