Urgent pension reform needed in Italy

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Urgent pension reform needed in Italy

Business Day

May 23, 2003

ROME - The head of Italian employers' body Confindustria has called for early implementation of the conservative government's pension reform plans to boost a stagnant economy.

"It's only in having a structural reform of pensions before the budget that the government can ... kick-start the economy,"Antonio D'Amato told the body's general assembly in Rome which was attended by Prime Minister Silvio Berlusconi.

A framework law that includes incentives to delay retirement is currently being discussed by the Italian senate and may be ready before the 2004 budget is presented in September.

Italy's powerful labour unions are vehemently opposed to the reform, particularly the idea of imposing financial penalties on those who retire before the legal age — currently 65 for men and 60 for women.

D'Amato is strongly in favour however. "Those who choose to take early retirement should receive a little less," he said.

The unions have threatened a general strike on the issue in the second half of June. Similar reforms in France and Austria have led to a wave of public service strikes in the past month.

But Social Affairs Minister Roberto Maroni said Thursday that the idea of penalising early retirees was not, for the moment, part of the framework law that he said dealt only with incentives to prolong working years.

The minister indicated he would consult Berlusconi on the issue, however. In his public comments on the issue so far, the prime minister has said the law should include both incentives and penalties.

On the broader issue of public finances, D'Amato told the assembly that the next budget was "the last chance" to kick-start the economy and called for a reduction in corporate tax, particularly for firms toiling in the underdeveloped south.

D'Amato said Confindustria predicted euro-zone growth of “only one% in 2003 and a modest 1.8% in 2004."