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Italy – Prime Minister wins key vote for labour reforms

26 November 2014

Matteo Renzi's labour market reform cleared a key hurdle in Parliament yesterday, in a show of political strength by the country's 39-year Prime Minister who has waged battle for weeks with the left wing of his party to secure the measure's passage, reports The Financial Times

The labour market reform package was approved by 316-to-6 in the lower chamber with enough members of Mr Renzi's Democratic party supporting the law  as opponents – from traditional centre-right lawmakers to economic populists to left-wing allies of the trade unions – deserted the vote.

The new law aims to shake up Italy's sclerotic labour market by shedding some of the hefty protections for workers on permanent contracts that have impeded the ability of companies to hire new employees.

Italy's unemployment rate is stuck at 12.6%, above the Eurozone average, with youth joblessness at 42.9%.

For years, international institutions ranging from the European Union, to the European Central Bank (ECB), and the International Monetary Fund (IMF) have urged Italy to reform its labour laws, with little success.

Following passage in the lower chamber this week, the Italian senate is expected to take up the bill in early December, meaning it could comfortably be enacted by the end of the year, as promised by Mr Renzi.

The passage of the  labour reforms through  the lower chamber came two days after regional elections in which Democratic Party candidates won the presidency of Calabria in the south and Emilia- Romagna in the north, confirming its status as the most popular political force in the country.

However, a huge drop in turnout suggested growing apathy towards politics which could be a warning sign for Mr Renzi. In particular, many left-wing voters in Emilia-Romagna, a hotbed of trade unionism, appear to have stayed home.