Europe Economy

Labor Market Reforms Key for Italy?

Italian daily " La Corriere della sera" on Thursday called 2010 the " annus horribilis" for Italian youth employment, saying that 500 000 young people have been laid off last year as business were careful to renew short term contracts.

Piazza Venezia, Rome, Italy
Panoramic Images | Getty Images

High labor taxes and low visibility on economic growth and business climate are just some of the reasons that are keeping businesses from offering jobs, especially long term contracts.

Giuseppe, 25 and law student from Rome, is one of many examples of young Italians looking for a job, but unable to find one because he says "without connections and recommendations it is difficult to even find a temporary job. Guiseppe says he has been unemployed for "da sempre" - that means for forever. He is looking for a part time job and says he is willing to do "anything that opens up" as he patiently waits for his turn at a government job center in the outskirts of Rome.

The lack of prospect of a steady income keeps a tab on spending and saving for retirement, risking of leaving the pension system underfunded.

But with the crisis and pressure from the EU, Italy is forced to overhaul its rigid labor market. PM Berlusconi has already announced a sweeping reform of labor contracts. But labor unions have signaled their discontent with the proposed measures, calling instead for a one-off wealth tax, more privatizations and a tougher crackdown on tax evasion.

"(This budget law) through an indiscriminate and general hiring-freeze in the public sector will affect immediately almost 100 thousand short-term workers who are risking their jobs immediately," Fabrizio Rossetti, chief of public relations for Italian trade union CGIL said

For now, Giuseppe may face more failures before he finally finds a job. For Italy though, failing to reform the labor market is not an option.