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Last Updated: Monday, 25 August, 2003, 19:22 GMT 20:22 UK
Italy floats raising retirement age
Silvio Berlusconi
Berlusconi is grasping pensions nettle
Italy's retirement age should be raised by five years, says Prime Minister Silvio Berlusconi.

The idea, floated in a Sunday newspaper interview, received a lukewarm welcome from his conservative allies and sparked union anger.

Italy, in common with other European countries, is facing a "demographic timebomb" as an ageing population relies on a smaller workforce to fund pensions.

In Italy people retire on average at 57. It means unsustainable costs and an annoying loss of talent, which could end up sinking us
Silvio Berlusconi
A leading businessman as well as politician, Mr Berlusconi said the status quo was unsustainable.

"In Italy people retire on average at 57. It means unsustainable costs and an annoying loss of talent, which could end up sinking us," Mr Berlusconi told the Libero newspaper.

"We need to raise the retirement age by five years.

"We start off every year with a 70 trillion lire (36 billion euros) pension deficit."

Mr Berlusconi said he would later put forward "strong reasons" for the change.

"I have to convince two parties that change is necessary - the Northern League and the (conservative) National Alliance," he said.

We should not force workers to stay on longer but instead persuade them to do so with a system of incentives
Labour Minister Roberto Maroni
Italy has been under pressure from both the IMF and European Union to reform its pension system, which currently costs around 15% of the country's GDP and is hampering efforts to reduce the budget deficit.

Mr Berlusconi tried unsuccessfully to overhaul the system in 1994 during his first time in office - sparking mass street protests and coalition collapse.

A minister from the Northern League - which brought down the government over the issue - said he agreed with the reforms in principle but the changes could not be imposed on workers.

"We should not force workers to stay on longer but instead persuade them to do so with a system of incentives," Labour Minister Roberto Maroni told La Repubblica newspaper.

The National Alliance's leader Ignazio La Russa warned that any measures would have to be taken gradually.

If they tear apart our pensions system, we'll fight them
Union leader Savino Pezzotta
The Christian Democrats' Rocco Buttiglione said a debate with trade unions and employers was needed, but he acknowledged that Berlusconi had put forward a brave proposal.

Under current Italian law, people who have worked for 35 years can retire at 57.

Mr Berlusconi says his plan to raise the age would be carried out in two stages, taking it to 60 by 2010 and only later to 62.

Opposition

Italian unions, already opposed to other Berlusconi labour reforms, said they would not accept the changes.

"If they tear apart our pensions system, we'll fight them," said Savino Pezzotta, leader of Italy's second-biggest union CISL.

Attempts in France to reform the pensions system have led to a bitter dispute between unions and government, with weeks of strike action and disruption to public services earlier this year.


SEE ALSO:
General strike cripples Italy
18 Oct 02  |  Europe
Fiat protests continue
11 Oct 02  |  Business
Italy's thorny labour law
16 Apr 02  |  Europe
Analysis: Italy's labour dilemma
24 Mar 02  |  Europe


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