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Italy`s case shows labor reform increases regular jobs

Posted August. 13, 2015 07:29,   


The job market in Italy, which was suffering from fiscal deficits, is now improving. In Italy, one of the so-called PIGS (Portugal, Italy, Greece and Spain) economies known for poor economic performances, 952,000 people newly clenched regular jobs during the first half of this year. In addition, 331,000 irregular workers were turned into regular ones. Regular employment has increased to 40.8 percent of Italy`s total jobs from 33.6 percent a year earlier. It is a result of labor reforms implemented by Matteo Renzi, the Italian prime minister in his 40s who is called a "pallbearer" of reforms.

Previously in Italy, employers were unable to dismiss workers "without justifiable reasons." However, Renzi`s Jobs Act took effect in March, allowing employers to lay off workers for management reasons. Then, businesses started to hire regular employees. Luxury car maker Lamborghini has decided to build a plant in Bologna.

South Korea`s job market is also in a serious situation due to low economic growth and excessive protection of regular jobs. The Economic and Social Development Commission, a tripartite panel for discussion of labor market reforms, is being restarted by its chairman, Kim Dae-hwan, who has returned to the job after offering to resign earlier this year. However, Kim said the government would not unilaterally push for two key issues of allowing employers to dismiss low-performing workers and change employment rules to employees` disadvantages without seeking their consent. The Federation of Korean Trade Unions (KFTU), one of the two major umbrella labor organizations, is refusing to return to the negotiating table unless the two issues are excluded from the agendas. Even though Kim`s remarks are intended to encourage the KFTU to return to negotiations, it would be hard to expect any meaningful progress to be made with such strings attached.

In Korea`s labor market, the employment flexibility is very low. Businesses shun newly hiring regular workers because of the burdens of taking the responsibility for the workers they employ, while increasing the hiring of irregular workers. The planned increase of retirement age to 60 next year will likely worsen the employment situation. The labor community should participate in the negotiations for labor reform from a broad point of view for the sake of young generations and the Korean economy, instead of just opposing it.