Italy 'must face pension reform'

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Italy 'must face pension reform'

BBC news online

September 29, 2003

Italy's pension system is unsustainable without a major overhaul and sacrifices from today's workers, Prime Minister Silvio Berlusconi has warned.

Silvio Berlusconi

Speaking on national television, Mr Berlusconi appealed to the electorate to back his government's plans to reform Italy 's expensive welfare system.

Mr Berlusconi said his government was determined to make changes that would provide Italians with greater "security and well-being", and said opponents of change were deceiving the public.

But union leaders dismissed Mr Berlusconi's appeal, and said the issue had been blown out of proportion.

"There is no pensions emergency in Italy today and there isn't going to be one in the coming years," said Luigi Angeletti, the leader of union federation UIL.

Running out of cash

Most independent observers say Italy needs to reform its pension system, which already swallows up the equivalent of 15% of gross domestic product (GDP) every year.

A low birth rate and widespread early retirement has drained the system dry in recent years, and by some measures it is already insolvent.

Mr Berlusconi's government wants to tighten up the criteria under which Italians qualify for a state pension, much to the fury of the country's powerful unions.

Earlier on Monday, the three main labour federations announced they would meet on Saturday to decide what action to take against the reform plans, including a possible general strike.

The row over pensions comes as the government approves its 2004 budget, which proposes sweeping cuts in state expenditure.