Monti’s labour reform has changed little

Overhauling Italy's rigid labour rules was supposed to be Mario Monti's flagship reform. It required drawn out, often heated bargaining with unions, employers and political parties. Yet six months after their approval the measures seem to be having little effect on hiring, firing or the labour market in general.

The technocrat premier's aim was to encourage hiring of permanent rather than temporary workers and to make it easier for firms to shed staff during economic downturns. Businesses and workers' bodies say it is doing neither.

Monti, who resigned as prime minister last month, hoped to boost a chronically low employment rate and end a "dual" labour market made up of over-protected older workers and millions of mostly young people on temporary jobs with no labour rights. However, he quickly ran into strong opposition, led by the CGIL union which found support from the centre-left Democratic party (PD) that he relied on for his majority and which is now, polls suggest, likely to win February elections.

The unions, which largely represent older, more protected workers, held a series of strikes and protests to defend existing job protection. Labour minister Elsa Fornero, who drew up the reform proposal, became a hate figure for millions of workers. After being watered down during a lengthy passage through parliament, the final version of the plan, approved in June last year, slightly eased firing restrictions in large and medium sized firms and made temporary hiring more costly.

Unions warned it could lead to a firing spree, while businesses said it would discourage new hires. Six months on, unionists now admit their fears were exaggerated, but employers say their concerns are being confirmed. "There is no evidence that companies are firing more under the new rules. It just isn't happening," said Pierangelo Albini, responsible for labour issues at employers' lobby Confindustria.

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