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Will Renzi really kick-start sclerotic Italy?

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Several protests against Matteo Renzi's Jobs Act have been held in Italy in recent weeks. Photo: Filippo Monteforte/AFP
15:56 CET+01:00
Italy's Prime Minister Matteo Renzi is pressing on with moves to make it easier for companies to hire and fire. But even supporters say the reforms are too modest - while sceptics claim that Italy can never be reformed.

The youthful prime minister wants to make the labour market much more flexible, in a country famous for its labyrinthine employment laws. The hope is that the changes will breathe life into the country’s tanking economy.

But even Italians who favour the plans are fatalistic about Renzi's chances of making them work:

"The idea is good, but not in a country like Italy," Franco Ricotti, a Rome-based businessman, said of the Italian government’s plans to shake-up the country’s stagnant job market.

"Because, despite all our creativity, we resist change too much."

It’s this resistance to change, even the slightest hint of it, that has spurred fervent protests in recent weeks as Renzi’s plans to overhaul Italy's sclerotic labour market moves through Parliament.

Two of Italy’s biggest trade union confederations – CGIL and UIL – have also planned a general strike on December 12th against policies that would shed hefty protections for people in permanent jobs.

The premier has so far managed to crush revolt, even from within his own Democratic Party, with the lower house of Parliament backing the plan last week, paving the way for a final vote in the Senate. The Senate debate gets underway at 5pm today, with a confidence vote expected on Wednesday.

The bill includes plans to reduce the number of short-term contracts and create a system that offers workers rising levels of protection with increasing length of service. But it’s the changes to Article 18 – a law drawn up in 1970 which protects those who are unfairly dismissed - that are causing the most angst among opponents.

Employers have long argued that the current law deters them from taking on new staff, because it makes it difficult for them to let people go when times are bad.

Paradoxically, some of the young people Renzi is trying to help have also been among the detractors, due to concerns of losing the privileges their parents enjoy.

Pietro Picinetti, the chief executive of Pordedonne Fiera, a conference and exhibition company in Veneto, welcomed the move.

Having laid off almost 200 people in the space of a few years, he has felt the brunt of the recession.

“Even today you can fire people if the company is in trouble, but with the new idea, it will be easier,” he told The Local.

“We have to change, we can’t stay in the same position all the time . In the last 14 years, the world economy has changed dramatically, and we have to change our labour and welfare system.”

But reducing the high taxes paid by Italian businesses and the hefty labour costs – which are among the highest in the Europe – is the only way to truly help revive the economy, he added.

For Ricotti, the Rome-based businessman, the reforms are a positive move but are not enough to lift Italy out of the quagmire of recession.

“Italian businesses need to also change their mindset. Sometimes they get comfortable and aren’t aggressive in attracting new business, which stalls hiring,” he said.

Nicola Nobile, an economist at the London-based Oxford Economics, told The Local that while the reforms are a move in the right direction, they’ll have little impact on Italy’s GDP.

“In the short-term, they won’t be an economy boost,” he said.

“What Italy needs is money, either through investment from the EU or private investors."

Nobile added that how Renzi deals with the opposition, and the consequences this has on the final version of the bill, will also be crucial in determining Italy’s ability to reverse its fortunes, as well as its ability to change.  

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