Analysis: Italy's labour dilemma

Rome's Circus Maximus: the venue for the rally

By the BBC's Gillian Hargreaves

You could not find a more appropriate place to give a thumbs-down to government policy than Rome's Circus Maximus.

On Saturday, crowds estimated at over a million gathered there - at the spot where the ancients used to hold chariot races - in one of the biggest shows of opposition to an Italian Government in years.

Nobody is going to stop us going ahead with our reforms

Silvio Berlusconi

They came from across the country to protest about government plans to liberalise the laws on employment.

The protesters fear that workers' rights will not be as well protected if the new laws come to fruition.

"This government is trying to cut every right of the workers. We are rich enough to have something more," said one protester.

Berlusconi's dilemma

Employment legislation in Italy is the most rigid in Europe. Yet the country is in the vanguard of the European economy.

More than a million people took part on Saturday

The Italian Prime Minister, Silvio Berlusconi, knows this. He also knows that continued economic growth can only be sustained by flexible working patterns.

He wants to make it easier to hire and fire Italian workers.

"What do I think of Mr Berlusconi? He is doing his own interests, and his interests are to protect himself and his money," said one trade unionist at the rally.

"My opinion cannot be very good about Berlusconi because he doesn't hear what people say."

There are pockets of great prosperity in Italy. Some of the northern cities are among the most productive and richest within the European Union.

But unemployment is currently running at 9%, and one in five people are looking for a job in the south of the country. It is not unusual for people to retire at 50.

Marco Biagi was gunned down on Tuesday night

Jacquamo Barbileri, a keen trade union member and one of the organisers of Saturday's protest, said that business should not only be about profit.

"We are facing a new, deep change in the labour market in general," he said.

"Europe will no longer be able to compete solely in terms of reducing costs. Europe must compete in terms of quality of work, products and services. This means the dignity of the working people."

Murder

There was a grim irony to Saturday's events. The protests were all about increasing workers' rights, but the man who wants to liberalise Italy's encrusted employment law was murdered three days ago.

Marco Biagi was shot in the head as he cycled home from work in Bologna. The guerilla group the Red Brigades admitted responsibility, saying his plans to try to liberalise employment law were an outrage.

Silvio Berlusconi still plans to go ahead with his employment reforms

The protesters in Rome called for an end to all political violence.

Although the march was planned months ago, the mood was subdued and marchers condemned the murder of Biagi. There was supposed be a day of activities, which were cancelled as a mark of respect.

It has been a bad week for the Italian government. In addition to the rally, a leading advisor was murdered, and a statement of emergency declared after a flood of immigrants.

But Silvio Berlusconi is in combative mood.

"Nobody is going to stop us going ahead with our reforms," he said. " Terrorists and street protesters won't stop us."

The government has asked the trade unions to return to the negotiating table. But they plan to stick by their liberalisation policy.

The unions are equally steadfast, and are planning a general strike for next month.

Liberalising the Italian economy could yet cause a political showdown.