Italy passes labour market reforms

Italian premier Mario Monti's government on Friday approved a long-awaited package of labour reforms, refusing to bend to union opposition and insisting the new rules will create a more flexible and inclusive labor market.

The measures are the third major initiative by Monti's government of technocrats since it took office in November charged with overhauling the stagnant Italian economy to promote growth and reduce its national debt of a staggering 120 per cent of its economic output.

The government said the measures, which were sought by the European Union, would encourage growth, create stable jobs and help businesses become more competitive.

A measure in the reforms that makes it easier to fire workers created the most serious challenge Monti has faced. He previously passed austerity measuresmostly tax hikes and a package of measures to liberalize the market.

Italy's largest major trade union confederation has pledged 16 hours of general strikes and demonstrations against the measures, while politicians with ties to unions say they would also seek changes to the plan as it goes through parliament.

Monti pledged to monitor for abuses, but insisted that companies would no longer be forced to rehire workers fired for economic reasons even if the employer's case is ruled unfounded, as has been allowed under a decades-old statute. A judge instead can order damages even though these cases are relatively rare.

Monti left untouched rules allowing a court to order a company to rehire workers unjustly fired if discrimination is proven, or in some instances if a judge rules disciplinary action was not legal.

The reform also includes a new unemployment compensation system, limits on temporary workers to encourage permanent employment and help get more young people into the work force and measures to guarantee gender equality in the work place specifically outlawing the practice of having women sign open-ended resignation letters commonly applied in the case of pregnancy.

The government declined to make the measures effective immediately, leaving a vehicle for lawmakers to make changes.

Senate President Renato Schifani said the move was "appreciated" by Parliament.