Italy union on attack over austerity cuts

Italy union on attack over austerity cuts
# 27 May 2010 00:32 (UTC +04:00)
Baku – APA. Italy’s 24 billion euro ($30 billion) austerity plan threatens to further erode government popularity and could lead to a national strike by a big union which contends it hurts the weak and spares the rich, APA reports quoting “Reuters”.
The government late Tuesday approved slashing funds to local bodies and freezing salaries for state workers, joining European peers like Spain and Portugal with spending cuts aimed at staving off contagion from the Greek crisis.
In a sign that a public backlash feared by Prime Minister Silvio Berlusconi could be brewing, Italy’s largest union joined smaller labor groups and the center-left opposition in attacking the measures.
"If I’m a citizen who earns a million euros a year thanks to capital gains, I don’t shell out a single euro in the set of sacrifices," Guglielmo Epifani, head of the CGIL union that has about 5 million members, told La Stampa daily.
"There’s no need for big words -- I expected more equitable austerity measures. It doesn’t seem to me that’s the case."
He said the union will decide on a national strike after evaluating the package, which Prime Minister Silvio Berlusconi is expected to present later Wednesday.
Strikes are common in Italy, but a national strike would sharply increase the pressure on Berlusconi, who so far has shrugged off the crisis as a figment of the left’s imagination.
Italy’s other major unions, CISL and UIL, offered more muted criticism of the plan and called for more cuts to perks enjoyed by politicians to save an "economy in war."
Berlusconi -- whose popularity has flagged over a corruption scandal -- has kept an unusually low profile in recent days, saying almost nothing about the budget cuts and leaving the talking to his top aides.
Italian media have reported he is unhappy with the package drawn up by Economy Minister Giulio Tremonti, fearing the cuts are too severe and will further hit sliding approval ratings.
But the plan drew praise from other quarters, including European Economic and Monetary Affairs Commissioner Olli Rehn, who called it "very significant."
The Moody’s ratings agency said the package should reassure markets on Italy’s commitment to cutting deficit levels, while S&P said it should put public finances on a more sustainable footing and preserve its current ratings.
The yield spread on Italian 10-year bonds compared with the German benchmark equivalent was broadly stable Wednesday at around 137 basis points after rises in recent days.
Analysts said the plan was an encouraging first step but probably not enough in the long run.
"We feel this should be a forerunner of a prolonged period of better fiscal management," said Raj Badiani, of IHS Global Insight. "Italy needs to break its protracted cycle of modest growth and high debt, otherwise it will remain vulnerable to future external shocks."
Others fretted the budget would stifle growth. With consumer morale down to its lowest level in a year, the chief of statistics agency Istat, Enrico Giovannini, warned it could undermine the chances of a recovery in consumer spending.
The cuts, amounting to about 1.6 percent of Italian GDP, are aimed at pushing the deficit below the EU’s 3 percent ceiling.
Though Italy kept its budget deficit down to 5.3 percent of GDP last year -- well below the EU average -- the budget aims to slash it to 2.7 percent by 2012.
In a bid to give the appearance that sacrifices will be spread evenly, the measures include pay cuts for ministers, parliamentarians and senior state-sector managers.
The plan also is expected to press regional and local governments to contribute some 13 billion euros of spending cuts in 2011-2012, almost inevitably affecting schools and hospitals. Busy arteries such as Rome’s ring road may become toll roads.
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