More cuts proposed in Italy

Less than a month after the Italian parliament voted through the last austerity package, the government, under pressure from the European Central Bank (ECB), has come forward with fresh proposals.

While, in the budget agreed in July, the budget deficit was to be eliminated by 2014, in the new plans, government income and expenditure are to be in balance by 2013.

The new proposals, which were agreed at a cabinet meeting on 12 August, involve a range of tax increases and budget cuts. They include cuts in the money going from central government to Italy’s regional and local administrations, as well as cuts in central government’s own spending. There is likely to be a new “solidarity tax” for high earners, together with an increase in the tax levied on investments.

As well as tax and spending measures, the government is considering proposals from the ECB to make the labour market more flexible. For example, altering the law on dismissal and redundancy, so that in future there was “a right to dismiss” as a well as “a push towards company-level agreements, overcoming the rigid centralised system”.

The reaction of the unions has been unenthusiastic. In a statement CGIL, the largest union confederation, said the proposals condemned the country “to recession and social division” and called on other unions to participate in joint action. This is unlikely, but the second largest confederation CISL has indicated its unhappiness with many of the plans.