Italian unions to challenge Berlusconi over pensions

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Italian unions to challenge Berlusconi over pensions

By Tony Barber in Rome

Financial Times, May 8, 2003

The centre-right government of Silvio Berlusconi, Italy's prime minister, yesterday faced a serious challenge to its economic reform programme as trade unions prepared to mobilise forces against planned changes to the pension system.

Leaders of Italy's three main union movements will meet next Wednesday to decide what form resistance will take. In April last year all three unions joined in a one-day general strike, Italy's first in 20 years, in protest at the government's labour market reforms.

Although no union leader has explicitly threatened a general strike in coming weeks, the government is conscious that demonstrations against pension reform were instrumental in bringing down Mr Berlusconi's first government in 1994.

Maurizio Sacconi, undersecretary at Italy's labour ministry, said the government would keep a promise not to push the pension reform through parliament without more consultations with unions and employers.

However, some industrialists, eager for action to cut Italy's labour costs, were more outspoken. "To refuse to confront the question of the welfare system and just go out on the streets doesn't help to find the solutions that are needed," said Antonio D'Amato, head of Confindustria, the employers' association.

The government's reform would introduce incentives for workers to stay longer in their jobs, expand supplementary pension schemes and reduce social security contributions paid for newly hired staff in some categories of work.

The aim is to lower the burden of pension payments on Italy's state finances, which suffer from a public debt of 106.7 per cent of gross domestic product. One goal is to raise the average age at which Italians retire - at 59, one of the lowest in the European Union.

Mr Berlusconi has pointed out several times since last December that many EU countries, such as Italy, have unsustainably expensive pension systems, and has called for a common EU approach to the problem.

But unions are critical of the proposals to cut social security contributions for newly hired staff and to make payments into supplementary pension funds compulsory.

The CGIL, the largest and most militant union, said it would recommend a "yes" vote in a referendum next month on a proposal to tighten Italy's employment protection laws.