Honeymoon over

11 April 2012 By Neil Unmack Follow @unmack1

Italian PM Mario Monti’s watering down of labour reforms has disappointed industrialists. The compromise isn’t all bad, but it is a missed opportunity to tackle flaws in Italy’s labour market. With many tough reforms still needed, Monti’s retreat gives markets another reason to fret.

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Italian Prime Minster Mario Monti announced on April 4 a series of labour market reforms aimed at revitalising Italy’s economy.
The law is designed to address the duality of Italy’s labour market, whereby employees on permanent contracts are highly protected, and temporary workers can be easily dismissed and have fewer benefits.
Under the reforms, compulsory reinstatement will only apply to cases where an employee has been unfairly discriminated against. For disciplinary cases and firings on economic grounds, a judge will be able to choose between reinstatement, or compensation. An employee fired for economic reasons can only be reinstated if they are ruled to be “manifestly inexistent”.
The current article 18 of the worker’s statute rules that employees that have been unfairly dismissed must be reinstated, and paid compensation for work hours missed.
The reforms also restrict the usage of temporary contracts and increase their costs to employers.
In addition, the benefits system will be amended to broaden the range of workers who receive benefits. The greater cost will be borne in part by an increase in social security payments for companies hiring temporary workers.

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