| Italy: PM Monti lays down the government agenda - pro-growth reforms to be presented |
| 09.01.12 10:37 | |
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Italy: PM Monti lays down the government agenda - pro-growth reforms to be presented over the next two months Interviewed on TV last night, Prime Minister Monti laid down the government agenda for the next few weeks. As also stated by Industry Minister Corrado Passera on Il Corriere della Sera during the week end, the government aims at presenting a comprehensive package of pro-growth reforms within the next two months. Based on PM Monti and Minister Passera's interviews, we understand that the government will introduce reforms gradually, recurring to a series of legal decrees, the first of which is to be presented ahead of the Eurogroup meeting scheduled for January 23. Our take: while talks are still preliminary at this stage, we found encouraging the fact that the government will be focused on two key points, which represent long-standing impediments to higher potential GDP growth, namely the need for more liberalisation and labour market segmentation. Between the two, we think that the government is likely to find it slightly easier to make progress on the latter as it seems that both government and unions are already on the same page on various points. However, liberalisation will be more difficult to implement as many categories, such as taxi drivers, pharmacists petrol stations, have threatened already to strike should the government decide to pursue these measures. Specifically on labour market reform, Welfare Minister Elsa Fornero starts talks with unions today. Based on media reports, it seems that talks will focus mainly on two issues: 1) how to reform article 18 of the labour treaty; and 2) how to overcome labour market segmentation. While on the first issue it seems the government, unions (in particular CGIL, the more representative of the three largest unions) and Confindustria are still some way from establishing any form of common ground, it seems to us that there is some sort of convergence on the second issue. In particular, they all seem to agree on the fact that job security should be better balanced between young and old workers. To do so, media reports that people involved in the discussions are likely discuss how to reduce hiring and firing costs in order to lower market segmentation. PM Monti's agenda for the next few weeks: According to IlSole24Ore, PM Monti will meet with Angela Merkel on 11 January in Berlin, with David Cameron on 18 January in London. Two days later, 20 January, there will be a summit with President Sarkozy and Chancellor Merkel in Rome. source: BarCap |
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