Italian Union Hints at Action on Pension Reform

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Italian Union Hints at Action on Pension Reform

By Tony Barber, the Financial Times

January 13, 2004

Italy's center-right government urged trade unions on Monday to continue talks on how to reform the costly state pension system.
However CGIL, the largest and most militant union, indicated it was running out of patience and might consider a more confrontational approach.

At a meeting of government officials and union leaders in Rome, Roberto Maroni, welfare minister, proposed extending the pension reform talks until the end of January.

They focus on a government proposal under which, from 2008, workers would have to make 40 rather than 35 years of contributions before qualifying for a full state pension.

Silvio Berlusconi, prime minister, describes the measure as indispensable because the pension system already accounts for almost 14 per cent of annual gross domestic product, and may rise to 16 per cent in 2030-2035 without the reform.

Emerging from Monday's meeting, Guglielmo Epifani, CGIL leader, told reporters: "The government asked us to carry on the talks, but we replied that it doesn't make sense." Mr Epifani did not specify what action the CGIL might take. But rising militancy is already evident in Italy's transport sector, where a one-day national labour stoppage last Friday was followed on Monday by a wildcat strike in Milan, the country's financial capital.

On the other hand, the CISL and UIL, two smaller and more moderate unions represented at the meeting, suggested they might be willing to continue a dialogue with the government.

The government's offer of more talks reflected uncertainty within the ruling four-party coalition over how much pressure to put on the unions to accept the pension reform. Some ministers do not want to shut the door on a possible compromise with the unions and are wary of provoking social unrest on a scale similar to that which helped bring down Mr Berlusconi's first government in 1994.

But the finance ministry drafted its pension reform proposal last September, and independent economists say the government needs to show the courage to push it through parliament if it is to earn credibility as an administration committed to difficult economic reforms.