Italian Prime Minister Matteo Renzi made important progress with his reform agenda on Friday when his cabinet gave final approval to key parts of his overhaul of labour market rules, which will now take immediate effect. After a four hour meeting, cabinet approved the legislative decrees which ease firing restrictions for large private sector firms and aim to reduce the use of temporary contracts.
Renzi says the new rules can boost job creation in a country which has one of the lowest labour participation rates in the euro zone and where young people are hired almost exclusively on temporary contracts with few rights or labour protection. "This day has been awaited for many years and it has been awaited by an entire generation," Renzi told reporters.
He estimated that at least 200,000 people on temporary contracts would switch in the next few months to a new type of permanent contract offering compensation in case of dismissal that gradually increases with seniority. This new contract, along with the reduction of job protection for workers in large companies and an extension of unemployment benefits for temporary workers, are the main legislative changes approved by the cabinet on Friday.
These had already been given a green light by parliament but required a so-called activating decree to pass into law. Other aspects of the reform, aimed at streamlining the many types of temporary contracts, overhauling the current system of job centres and training and further revising unemployment benefits, are still before parliament.
Renzi's Jobs Act has been fiercely contested by trade unions and the left wing of his own Democratic Party, who say the easing of firing restrictions undermines basic workers' rights. On the other hand, some employers' bodies wanted it to go much further by including the public sector and changing the terms of those already in work, rather than just new hires. Under the reform, companies with more than 15 employees will from now on be able to fire workers for business reasons without the risk of having to reinstate them even if the dismissal is ruled unlawful.
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