Agreement reached on Italy labour law reforms
Italy’s Prime Minister Mario Monti has agreed to compromise in crucial negotiations with the main political parties on labour law reforms to ensure the proposals’ passage through parliament.
Prime Minister Mario Monti’s meeting with the leaders of the three mainstream parties was described as having a ‘positive outcome’, ensuring that the proposals get the parties’ backing through parliament.
Key proposals to give employers more freedom to fire staff had been resisted by the centre-left Democratic Party.
The passage of the labour reforms, part of a €20bn austerity package of spending cuts and tax reforms, is critical to the country’s prospects for economic growth. Already, the markets have been reassured that Monti is making good progress in getting the Italian economy back on track to growth.
BlackRock has returned to buying Italian stocks, in what is seen as a vote of confidence in the economy’s prospects.
Nigel Bolton, head of BlackRock’s European equities team, said in an interview with Bloomberg: “As the direct result of Berlusconi going, we started to put money back into Italy and it’s our second-biggest overweight country in Europe. We’ve gone back overweight Italy, after having had virtually nothing there for a number of years.”
He added: “Labor reform is the tough one, and if we get through that, I think Italy is well on the way to solving some of the issues.”
The draft law reduces temporary work contracts and allows employers more leeway in firing. Italy’s unemployment rate reached 9.3% in February, the highest since the first quarter of 2001. Joblessness among Italians aged between 15 and 24 increased to 31.9% in February.
In an interview with La Stampa newspaper, Monti, whose term ends in April 2013, said that the parties backing his government might form a “grand coalition” after the next elections, indicating he would not be leading such a government.
In the interview, Monti rebuffed a claim made in an internal EU report that Italy would need further austerity measures. He such measures would not be needed, even if the recession proved deeper than forecast.