Italy’s main employers’ lobby Confindustria clashed with the government on new rules limiting short-term contracts, possibly triggering a wider conflict on the new administration’s populist economic policies.
The decree approved on Monday “is the first true act of the new executive and for this reason it is a very negative signal for the business world,” Confindustria said in a statement on Tuesday. “The government is shifting into reverse gear.”
Since the last review of the labor code under former Italian prime minister Matteo Renzi’s government in 2014, employed Italians rose by about 1.1 million, Bloomberg calculations showed.
However, nearly 75 percent of them were on fixed-term jobs, prompting the new government to pass rules restricting the use of such contracts with limits to their duration and the maximum number of times they can be renewed.
The rules also increase financial compensation in case of dismissals.
Moreover, while employment in the eurozone’s third-largest economy is back to levels recorded before the double-dip recession started in 2008, the number of worked hours remains well below the pre-crisis level.
The wide-ranging decree would also penalize some companies that relocate abroad after receiving state aid and limits gambling advertising, with the measures taking effect immediately.
It was passed by the coalition of the anti-establishment Five Star Movement and the anti-migrant League, which took office on June 1.
It would have to be converted into law by the legislature within two months.
Lawmakers would be able to make changes, although Italian Prime Minister Giuseppe Conte said he expects them to be loyal to the government program and limit their amendments to the decree.
The end result “will be to have less work” with no reduction in job uncertainty, Confindustria said.
The “decree does not favor investments in Italy or the quality of employment,” former Italian prime minister Paolo Gentiloni said on Twitter. “It only introduces obstacles for work and investment.”
Italian Minister of Economic Development, Labor and Social Policies Luigi di Maio, also the Five Star leader and deputy prime minister, defended the new rules.
“This decree protects honest workers without damaging honest businessmen. Those who do not abuse have nothing to fear,” Di Maio told reporters on Tuesday.
“We will be on the side of entrepreneurs by lowering” the taxation on companies, he said, citing a flagship electoral promise by the League.
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