Roundup: Italian cabinet rolls out new employment, benefits rules after job market reform
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E-mail Xinhua, February 21, 2015
Italy's cabinet on Friday approved the necessary decrees in order to put a recent job market reform into practice as of March.
The reform, dubbed "Jobs Act", had been passed by Italian parliament in December 2014.
The new measures introduced a new type of contract that gives all new employees progressive job protection, and cancelled some types of temporary and project-based contracts that have been widely used in recent years.
The cabinet's decrees removed the right of workers to reinstatement in all cases of layoff for business reasons, in order to make hiring and firing rules easier for companies.
Workers will retain only the right to a compensation of between 4 and 24 months' salary, even if the dismissal is judged as unjustified, and reinstatement will remain for discriminatory layoffs and "selected cases" of disciplinary dismissals.
This rule will affect all new hires in the private sector, and will not apply to the public sector or people already employed.
Until now, the reinstatement in Italy could be ordered by a court in case of unjustified dismissals only in companies with more than 15 employees.
Other major changes included a unified unemployment benefit system, which will extend benefits to temporary workers and other categories of workers who were not entitled to protection before.
A tax break for firms hiring on permanent basis was also approved on Friday, in order to promote the new type of contract.
Confirming a provision delivered in May 2014, the cabinet decided companies would remain free to renew fix-term contracts up to 36 months.
The new rules will start to be implemented as of next month.
The job market reform was presented by Prime Minister Matteo Renzi's cabinet in March 2014, and went through a tense discussion among parties and in the country before getting a final approval in parliament in December, only after the cabinet had won a crucial confidence vote in Senate.
The provision has met with opposition from leftist political forces and trade unions, which fear the reform could jeopardize job protection by making it easier for companies to fire workers.
Tens of thousands of people rallied in several cities against the Jobs Act in November, and a general strike was called in early December.
The cabinet said a more flexible job market was a priority in order to revamp the economy, and a fairer unemployment benefit system was needed to overcome a current "dualism" between the older and most protected employees and thousands of young workers entitled to almost no benefits at all.
Italy's unemployment rate was at 12.9 percent and youth unemployment at 42 percent in December, according to Italian National Statistics Institute for Statistics (ISTAT).
On Thursday, the Organisation for Economic Cooperation and Development (OECD) revised upwards its forecast for Italy's growth in 2015 to 0.6 percent from a previous 0.2 prediction.
OECD said Renzi's cabinet reform agenda might bring about a 6 percent increase of Italy's gross domestic product (GDP) within 10 years, if "fully implemented". Endit
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