Italian voters might have to head to the polls sooner than expected and not to elect a new government.
The Italian constitutional court said Wednesday that it will assess the request of the country's largest trade union for a referendum on labor market reform. Its decision will be announced on January 11, but expectations are that there are enough signatures to trigger a new referendum vote in the country.
The likelihood of another popular vote – Italy voted and rejected a package of constitutional reforms on December 4 - has sparked further concerns over the country's political and economic stability.
"The likely decision to hold a referendum on the labor market reform approved under the (former PM Matteo) Renzi government is negative news, as it puts at risk one of the most important bills Italy has approved over the past few years," Barclays said in a note on Wednesday.
Labor market reform was one of the flagship events of the mandate of former Prime Minister Matteo Renzi. According to Barclays, repealing the jobs act would mean that there would be renewed uncertainty about firing costs, which would make Italian companies less willing to hire workers on permanent contracts.
Erik Jones, professor of European studies and international political economy at Johns Hopkins University, told CNBC via email that putting labor market reform to a referendum is questioning the legacy of Renzi's government.
"A good comparison would be what Donald Trump is planning to do to Obamacare," he said.
"The jobs act was an important reform insofar as it helped to shift people from precarious to full-time employment," Jones said.
The reason why trade unions want to put the reform to a referendum is because they believe the new laws question the protection of employees, Jones added.