Italy's largest trade union confederation, the Italian General Confederation of Labour (CGIL), announced earlier this week that it was challenging the labour reforms passed by the government earlier this year, reports gazettadelsud.it.

CGIL said it had petitioned the European Commission to take action because the reform allegedly breaks European law by encouraging firms to hire staff on temporary contracts rather than permanent ones. The union have highlighted that the legislation removes the obligation for firms to stipulate why a worker has been offered a temporary contract rather than a permanent one.

The legislation, which won final approved in May, is part of a drive to simplify Italy's current myriad of work contracts and benefits and help encourage firms to take on workers, especially young ones.

Unemployment in Italy is over 12% and over four-in-10 of under-25 in the labour market are unemployed.

Companies employing more than 20% of their workforce on short-term contracts are subject to fines under the terms of the new law. The new law also makes it possible for firms to renew temporary contracts up to five times within three years without giving any reason for using a temporary worker rather than a permanent employee.

Unions and the anti-establishment political party 5-Star Movement (M5S), founded by comedian and activist Beppe Grillo, said this cements the chronic state of job insecurity many new entrants to the labour market endure in Italy.

Prime Minister Matteo Renzi said he is aiming is to change the labour system by giving workers gradually increasingly levels of job security the longer they are with a company. The goal is to prevent employees being discouraged from hiring staff by labour regulations that make it very hard to get rid of workers once they are on the books.

Many economists say the current system has produced a sort of labour-market "apartheid", with workers in steady jobs, usually people who are well into their careers, enjoying high levels of labour rights and job security, while young workers are facing greater employment insecurity.