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Tuesday, 16 April, 2002, 20:12 GMT 21:12 UK
Italy's thorny labour law
Sergio Cofferati in Florence
Cofferati's CGIL union is least likely to compromise
At the root of the dispute between the Italian Government and the unions is one article - Article 18 - of the country's labour law.

This says that any worker in a company of 15 or more employees who is fired can seek immediate recourse to an independent tribunal which will decide if he or she was dismissed with "just cause".

If the dismissal was without just cause, the employer must reinstate the worker and pay the full salary since dismissal.

The government wants to free certain companies from the restraints Article 18 imposes, giving them greater freedom to hire and fire.

More specifically, it wants to suspend the law:

  • For employees of companies in the poorer south of the country who have been shifted from temporary to permanent work contracts
  • For employees in companies which were operating in the black economy but have decided to legalise their business
  • For companies with less than 15 employees who decide to increase hiring, thereby taking the workforce over the 15-employee threshold which guarantees more worker protection

The government says this will encourage companies to hire more staff, and thus reduce unemployment.

Under its proposals, workers who are dismissed without just cause - a definition open to interpretation - would get two years' salary compensation but not their job back.

Rigid labour market

The change would not affect those who are already in full-time jobs.

Demonstrators with balloons in Rome's central Piazza del Popolo
The balloons carry a pro-Article 18 message
Italy currently has the most rigid labour market in Europe and economists say the government needs to go much further if it is to succeed in making its economy competitive.

This is one reason why the unions have taken a stand on Article 18.

They see the government's plans to change it as the start of a slippery slope which could see other rights and guarantees gradually eroded.

The country's three main unions have a history of poor relations but this issue has united them.

Despite six months of negotiations, neither side has shown signs of any willingness to budge.

The government, with a comfortable majority in both houses of parliament, has threatened to implement the changes without union agreement.

Bargaining chip

However, a few days before Tuesday's general strike, Mr Berlusconi held out the prospect of talks, which two of the three big unions have agreed to attend.

The government is expected to propose, in return for agreement to its changes to Article 18, the creation of a proper unemployment benefit fund, to provide protection for workers who lose jobs with small and medium-sized companies.

A benefit system funded by employers' and employees' contributions exists to help people laid off from large Italian companies, but not the millions who work for smaller employers.

Correspondents say at least one of the big unions is likely to be interested in agreeing a deal with the government along these lines.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Brian Barron in Rome
"The Italian government wants to curb the powers of union militants"
Giacomo Barbieri of the trade union CGIL
"People have rights, and must defend their dignity"
The BBC's David Willey reports from Rome
"Italy's labour laws are extremely rigid"
See also:

16 Apr 02 | Europe
Millions strike in Italy
16 Apr 02 | Europe
In pictures: Italy on strike
15 Apr 02 | Europe
Italy's politicised strike
25 Mar 02 | Europe
The new messiah of Italy's left
24 Mar 02 | Europe
Analysis: Italy's labour dilemma
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