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News Analysis: Italy eases rules on temporary labour as broader job market reform

English.news.cn   2014-05-15 22:29:45

by Alessandra Cardone

ROME, May 15 (Xinhua) -- Italy's Lower House gave final approval on Thursday to a labour decree aimed at easing rules for temporary labour, as part of a wider overhaul of the job market planned by Prime Minister Matteo Renzi's cabinet.

The decree became law with 279 votes in favour and 143 votes against, and after the government had won a decisive confidence vote in the same Chamber of Deputies on Tuesday night. Another confidence vote on the measure was won in the Senate last week.

The government's decree was first introduced on March 20 to try to mitigate an alarming unemployment rate by introducing more flexibility over temporary labor, and parliament had 60 days to convert it into law.

Renzi's cabinet decided to use the confidence vote procedure, which binds the government to resign in case of negative response, so as to limit debate and speed up the legislation.

The new law simplifies bureaucratic rules and provisions companies have to obey to in order to hire temporary workers, allowing firms to extend temporary contracts for up to 36 months without justifying their decision.

The previous legislation asked companies to specify their reasons for each extension of a temporary contract beyond 12 months, as a measure to promote permanent jobs.

Businesses will also be free to renew temporary contracts up to five times during the 36 months.

"With respect to the current condition of our economy, the measure could help promote a faster improvement of employment," Stefania Tomasini, head of economic analysis and forecasting with Prometeia think tank, told Xinhua.

The new law aims to give companies a more flexible tool to hire, the economist explained, in the current content wherein recovery is "in sight" but still sluggish and uncertain.

"Entrepreneurs still don't know if the trend of growth will strengthen, and in such conditions they would rather wait until recovery is beyond question before hiring," Tomasini elaborated.

"To ensure they start to create new jobs now, the government is providing them with a wider opportunity to offer contracts that are not too much binding," she added.

Temporary contracts, however, will have to be limited up to 20 percent of the total workforce in a company. The decree was amended on this point in order to make firms surpassing this limit to pay a fine only, whereas a previous version would have compelled them to hire permanently all workers exceeding the 20 percent limit.

"I don't expect this specific rule to represent a major obstacle, even because it is not intended for smaller companies," Tomasini said. In fact, the 20 percent limit would not apply to firms with less than five employees or to research institutes.

The new law will provide more funds and higher tax breaks for the so-called "solidarity contracts," which allow companies to establish reduced working hours for all workers, thus avoiding the dismissal of redundant employees with the state paying a part of the lost wages.

Government action on the job market was most needed in Italy, given the record high unemployment. The jobless rate reached 12.7 percent in March, with a 42.7 percent rate among youths and over 1 million families without any labor income, according to official statistics.

Yet, both the government and analysts seemed to judge the measure on temporary work alone as insufficient to tackle the emergency.

The new law would be part of a broader reform dubbed the jobs act, which is yet to be fully outlined. Its main announced goals would be to ease hiring rules, simplify contracts and match flexibility with social security.

"This decree was a first answer to entrepreneurs' call for more flexibility and it may give good results in the short term. But if it becomes the only permanent measure it would risk to fuel job insecurity instead," Tomasini warned.

High unemployment cannot be tackled with single provisions, the economist explained.

"To perform well, Italy's job market needs a broader reform to reduce the existing inequalities between permanent and temporary contracts, while improving the social security system," she added.

Editor: yan
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