Yaacov, looks like Albania will take Italy place in ECU..<gg>
Italy's unions fight welfare cost of euro
By Julian Coman
ITALY'S socialist government is bracing itself for a summer of discontent as it
attempts to drag the economy into line with other euro zone countries.
Giuliano Amato, the Finance Minister, will this week gamble on controversial
plans to cut the country's welfare budget by more than £5.3 billion and tighten
the generous pension system. Italy spends more than twice the European
average on pensions, where it is still possible to retire at 55.
The programme is an attempt to stabilise Rome's finances, which have broken
Brussels rules on debt and angered fellow single currency members. The new
president of the European Commission, Romano Prodi, last week caused the
euro to fall to an almost lifetime low by intimating that Italy would "not be able
to stay in the euro" unless its economy was radically transformed.
The planned cuts have also led to protests from crucial allies. The country's
11-million strong trade unions are the most powerful in Europe, capable of
paralysing the vast public sector. The leaders of the two biggest unions, the
Roman Catholic CISL and the socialist CGIL, are outraged that a
government of the Left is contemplating a "Thatcherite" attack on spending
and are threatening a general strike.
Sergio Cofferati, who heads the CGIL said: "If the government attempts to
carry out these proposals they will find our reaction is extremely severe." He
has said privately that the future of trade unions in Italy is now at stake. Five
years ago, mass demonstrations and industrial action led to the fall of Silvio
Berlusconi's Right-wing government, when it made the mistake of proposing a
raise in retirement thresholds.
Sergio d'Antoni, the leader of the CISL union said: "The fact that these
proposals are by a centre-Left government instead of Mr Berlusconi makes
no difference to our position." The reform package has also caused fury and
division among members of Prime Minister Massimo d'Alema's government.
Cesare Salvi, the minister for work, said: "We are not and should never be a
Thatcherite government." Alfiero Grandi, a socialist deputy, said: "If the
government tries to take on the CGIL, it risks its own survival. A
confrontation with the unions would lead a section of MPs to take the side of
the unions."
But Mr d'Alema has little alternative but to take on his own power base. Italy
has guaranteed to fellow euro zone members that its budget deficit will be
reduced by more than a third by 2000 and welfare reform is central to that
target. The stakes have been raised further by Gerhard Schröder, the German
. Italy now has the highest welfare costs in the European Union and the lowest
growth. Mr d'Alema has placed his reputation on the line saying: "We have to
respect our European obligations. This is an objective which should unite the
country."
A spokesman for Confindustria, the Italian business organisation, said: "These
reforms are indispensable if Italy is to be trustworthy on the international
scene. What we need is proper sweeping reform once and for all."
But the political author and commentator Sergio Romano is pessimistic of
radical reform. He said: "Two million demonstrators went on the streets in
1994 to demonstrate against Berlusconi's pension reforms and he
surrendered. Cofferati will never accept the role of grave-digger of the CGIL,
which he would become by giving in to the Amato package."
Marco Contini, a socialist official at the Italian Senate, said that the attempts
by Mr d'Alema to follow in the footsteps of Tony Blair and Mr Schröder and
achieve public spending cuts were doomed. He said: "D'Alema thinks he can
form a Berlin-London-Rome axis with Blair and Schröder, who have both
spearheaded welfare reform. But he's playing a very dangerous game indeed.
If he takes on the unions he could lose everything. A Thatcherite attack on
state spending is just not possible here."
telegraph.co.uk
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