Italy's Renzi pushing labor reform, but scepticism growing

[September 16, 2014]  By James Mackenzie

ROME (Reuters) - Prime Minister Matteo Renzi said on Tuesday he would force through changes to Italy's labor laws with special emergency measures if parliament dragged its feet, and rejected criticism his government was moving too slowly with its reform agenda.

Renzi, under growing pressure to back his promises with action, said that reforms to an unjust labor system that divided Italian workers into "first division" and "second division" categories would be at the heart of the program.

He said the government would work with parliament to cut through the thicket of regulations covering employment as long as the reforms could be passed soon enough.

"Otherwise, we are ready to intervene with emergency measures, because when it comes to jobs, we can't waste another second," he said in parliament.

He said the next budget planning document, due next month, would contain resources to simplify and reinforce welfare measures for workers who lost their jobs. At the same time, he said, the government would cut payroll costs for companies.

Renzi's address to parliament came in response to growing criticism that his government had made little progress with the reforms it promised when it came to office in February. He offered few specifics in a speech of just under an hour.

Successive Italian governments have promised to reform a labor market that guarantees extensive rights to workers on full-time, open-ended contracts but leaves an increasing number in insecure, temporary jobs with little protection.

Renato Brunetta, the floor leader of Silvio Berlusconi's opposition Forza Italia party, said Renzi had offered nothing more than "empty words and hot air".

With youth unemployment running close to its highest level since the 1970s at around 43 percent, stimulating job creation is an urgent priority for Renzi. He faces a grim economic climate, though.

Economic data last month showed Italy's economy slipped back into recession in the second quarter of the year, its third recession since 2008. On Monday, the Organisation for Economic Cooperation and Development forecast that the economy would shrink 0.4 percent this year.

Implicitly rejecting criticisms that the government had focused too much on constitutional reforms rather than measures to revive the economy, Renzi said change had to come on a broad front.

"Either we get all the reforms done together or we won't get past the snail's pace that has stopped us growing for 20 years," he said.

Renzi said the government would push on with constitutional reforms aimed at making government more efficient, reshaping the electoral law and overhauling a justice system blamed for chronic delays and uncertainty.

(Reporting by James Mackenzie; Editing by Larry King)

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