Feb. 2 (Bloomberg) -- Italy’s rigid firing rules can hurt economic growth and changing them to make it easier for companies to shed workers can’t be “taboo,” Prime Minister Mario Monti said.
The code in the labor law known as Article 18, which bans firing without just cause and forces employers to rehire and compensate workers deemed to be unjustly fired, “is not a taboo and can be pernicious in some circumstances,” Monti said last night in an interview on Canale 5’s “Matrix” show.
Labor Minister Elsa Fornero resumes talks today with union leaders and employers, who remain divided on how to spur hiring in an economy where youth unemployment tops 30 percent.
Italy last month passed 20 billion euros ($26 billion) in tax hikes and spending cuts and a package of measures to spur competition and growth, helping push the yield on the country’s 10-year bond to the lowest in almost four months.
Employers say the law makes them reluctant to hire workers, because it makes it hard to reduce staff during tough economic times.
The revamping of the labor laws aims to reduce what Monti called the “terrible apartheid” between workers who have total job security and those trying to break in to the labor market who are forced to accept temporary contracts that offer little protection.
Article 18 is one of the sticking points at today’s meeting in Rome, the second round of talks the government has held with unions in less than two weeks.
Envelopes containing bullets and addressed to Fornero, union leaders and Emma Marcegaglia, head of employers lobby Confindustria, were intercepted by the postal service earlier this week, Ansa newswire reported on Jan. 31.
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While Fitch Ratings and Standard & Poor’s last month lowered the nation’s credit rating, Italian bond yields have gained since the European Central Bank lent 489 billion euros to banks for three years on Dec. 21 to avert a credit crunch in the euro region.
The yield on Italy’s benchmark 10-year bond was up two basis points to 5.7 percent at 9:46 a.m. Rome time, widening the difference over comparable German bonds to 386 basis points, up from 382 yesterday.
The yields “need to go down further than they have already done,” Monti, 68, said in the interview on Canale 5. “I expect them to do so.”
Monti also said that state-asset sales are not a priority for his government, though there may be “some room” for them in the future.
He said he has no intention to stay in politics when his term ends in early 2013 and looks forward to leaving Italy in better shape than when he took office in November.
Monti said the support of his predecessor, Silvio Berlusconi, is “key” for his government. Monti, who heads a non-elected government and doesn’t lead a political party, said he doesn’t take parliamentary backing for granted and support from parties besides Berlusconi’s is also important, he said.
businessweek.com
The code in the labor law known as Article 18, which bans firing without just cause and forces employers to rehire and compensate workers deemed to be unjustly fired, “is not a taboo and can be pernicious in some circumstances,” Monti said last night in an interview on Canale 5’s “Matrix” show.
Labor Minister Elsa Fornero resumes talks today with union leaders and employers, who remain divided on how to spur hiring in an economy where youth unemployment tops 30 percent.
Italy last month passed 20 billion euros ($26 billion) in tax hikes and spending cuts and a package of measures to spur competition and growth, helping push the yield on the country’s 10-year bond to the lowest in almost four months.
Employers say the law makes them reluctant to hire workers, because it makes it hard to reduce staff during tough economic times.
The revamping of the labor laws aims to reduce what Monti called the “terrible apartheid” between workers who have total job security and those trying to break in to the labor market who are forced to accept temporary contracts that offer little protection.
Article 18 is one of the sticking points at today’s meeting in Rome, the second round of talks the government has held with unions in less than two weeks.
Envelopes containing bullets and addressed to Fornero, union leaders and Emma Marcegaglia, head of employers lobby Confindustria, were intercepted by the postal service earlier this week, Ansa newswire reported on Jan. 31.
Spread Narrows
While Fitch Ratings and Standard & Poor’s last month lowered the nation’s credit rating, Italian bond yields have gained since the European Central Bank lent 489 billion euros to banks for three years on Dec. 21 to avert a credit crunch in the euro region.
The yield on Italy’s benchmark 10-year bond was up two basis points to 5.7 percent at 9:46 a.m. Rome time, widening the difference over comparable German bonds to 386 basis points, up from 382 yesterday.
The yields “need to go down further than they have already done,” Monti, 68, said in the interview on Canale 5. “I expect them to do so.”
Monti also said that state-asset sales are not a priority for his government, though there may be “some room” for them in the future.
He said he has no intention to stay in politics when his term ends in early 2013 and looks forward to leaving Italy in better shape than when he took office in November.
Monti said the support of his predecessor, Silvio Berlusconi, is “key” for his government. Monti, who heads a non-elected government and doesn’t lead a political party, said he doesn’t take parliamentary backing for granted and support from parties besides Berlusconi’s is also important, he said.
businessweek.com
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