October 7, 2014 / 2:18 PM / in 3 years

Italy's Renzi tells party rebels to back him in key jobs vote

Italy's Prime Minister Matteo Renzi addresses the 69th United Nations General Assembly at the United Nations Headquarters in New York September 25, 2014. REUTERS/Mike Segar

ROME (Reuters) - Italian Prime Minister Matteo Renzi said on Tuesday he expected rebels from his Democratic Party (PD) would swing behind him in a confidence vote over contested labor reform plans that he has to win to remain in power.

The 39-year-old former mayor of Florence has staked his political credibility on the so-called Jobs Act, which he says is vital to helping Italy cut record unemployment and enable its chronically stagnant economy to emerge from recession.

Wednesday’s vote in the Senate, where the government has only a slim majority on paper, coincides with a meeting of EU leaders in Milan which Renzi has called to discuss ways of boosting growth and jobs across Europe.

Renzi hopes victory would boost his EU credentials at a time when Italy is back tracking on its debt-reduction pledges, and sounded optimistic that he would overcome internal PD dissent.

“I‘m not worried about ambushes,” he told reporters, referring to the risk that some PD members could vote against him. “I‘m convinced that it is natural that all senators should vote in favor, as has always happened.”

The prime minister called the confidence vote in order to truncate debate over his broad-brush proposals, which at present lack precise details of what he intends to do to generate jobs.

The nitty-gritty will be worked on in the coming months and put to subsequent parliamentary votes. However, Renzi has made clear that the eventual law should amend article 18 of the Labor Statute which makes it extremely hard for companies with more than 15 employees to fire workers with regular contracts.

Renzi says the rigid labor law makes it unattractive for firms to take on new staff and deters foreign investment.

STRIKE THREAT

Unemployment in the euro zone’s third largest economy is running above 12 percent and joblessness among people below the age of 25 is at an all-time high of 44 percent. Young people able to find work at all are invariably given temporary contracts with no employment rights or job protection.

“If the ruling majority wants to carry on then it will vote in favor. If it doesn’t want to carry on then it will vote against, but the reforms have to get done,” Renzi said.

Several angry PD left-wingers, including former leader Pier Luigi Bersani, have already said they will back Renzi out of a sense of “responsibility”.

Renzi wants to cut the number of short-term contracts, boost the role of employment agencies and extend jobless benefits. But he faces resistance from unions over any changes to article 18 and met labor leaders on Tuesday to discuss the plan.

The left-wing CGIL, Italy’s largest union, reiterated its opposition to the project after the meeting and threatened protests and strikes, while the smaller CISL and UIL unions were critical of the government but appeared less intransigent.

CGIL chief Susanna Camusso said Renzi had “informed” them of his intentions and shown no real willingness to negotiate.

While the confidence vote is just one modest step in the long process of drawing up the detail of the reform and getting it through parliament, it will enable Renzi to show Italy’s partners his reform agenda is still moving forwards.

He is also preparing an expansionary 2015 budget in an attempt to stimulate the economy which has scarcely grown since the start of the century and is hoping the EU cuts him some slack to bring down Italy’s massive public debt more slowly than the region’s fiscal rules dictate.

The chances of such leeway being granted will increase if the European Commission, Germany and other northern European countries are persuaded that Italy is finally carrying out structural reforms that can improve its dismal growth potential.

additional reporting by Roberto Landucci, writing by Gavin Jones; Editing by Crispian Balmer

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