Italy’s Economic Suicide Movement

Protests against Prime Minister Matteo Renzi’s labor reforms illustrate Europe’s jobs problem.

From the WSJ, 10-27. Excerpts: 

"Italy’s labor-market rules have remained largely unreformed since the modern Italian state was established. Spread over some 2,700 pages, the labor code divides the labor force into two parts. Older workers benefit from the full weight of the law, including ironclad protections against being laid off, fired or disciplined, whether for performance or economic reasons."

"Then there is the Cassa Integrazione Guadagni. Under this income-assistance scheme, businesses that need to downsize can put some workers on “standby,” and the government will cover a significant share of the normal salary until the company can hire back the worker."

"Need to fire a worker for poor job performance? To do so, businesses must persuade a judge that no alternative short of termination was available—a process of administrative hearings and litigation that can take months and drain company resources."

"Italy has the largest number of small businesses in the European Union not because companies don’t want to grow, but because they fear growth will mean having to negotiate with the militant national unions like CGIL."

"The official unemployment rate stands at 12%, and half of Italy’s young people are unemployed."