(Adds proposal for deadline on labour reform)
By Valentina Za and Lisa Jucca
CERNOBBIO, Italy, March 24 (Reuters) - Italy’s biggest labour union threatened on Saturday to step up strikes to protest against plans to open up the job market that the government says will encourage investment but critics say will fail to boost employment and the economy.
The bill, the first radical overhaul of Italian labour rules since the 1970s, faces lengthy political debate after the government of Prime Minister Mario Monti opted to send it through parliament, a process that could take several months, rather than pass it by decree.
The centre-right People of Freedom (PDL) party, the biggest in parliament, proposed on Saturday that a deadline should be set to limit delays to the reform’s approval, but getting parliamentary backing won’t be easy.
The reforms have run into angry opposition from main labour union CGIL and allies in the centre-left Democratic Party (PD), which it is historically close to.
Susanna Camusso, the leader of the 6-million-strong CGIL, vowed to press ahead with plans for 16 hours of strikes, including a full-day nationwide stoppage.
“These labour reforms do not create a single new job,” she said on the sidelines of a business conference at Lake Como.
“This is not going to help revive growth. Growth is a result of rigorous investment policies ... If anything, the strike has to be toughened, and substantially.”
The PD, a key government backer in parliament, has vowed to amend the much-contested draft measure.
“We cannot accept money as the only way-out for lay-offs due to economic reasons,” PD leader Pier Luigi Bersani told reporters at the conference. “We won’t budge on this point.”
Unions are particularly angered by a proposal that would weaken an obligation for companies to re-hire workers if a court rules they have been wrongfully laid off, and allow employers to offer monetary compensation when facing economic difficulties.
A long debate would delay the introduction of the more flexible labour rules that the government says are vital to attract more investments into Italy’s hard-pressed economy.
“My proposal is to set a time limit by which the parliament should approve the reform to show we are serious on this,” said Angelino Alfano, secretary general of Silvio Berlusconi’s PDL.
“We should all commit not to toy with this fundamental pillar (of the reforms),” he said, adding that the summer looked like a reasonable deadline.
Labour Minister Elsa Fornero told the conference the reform would make Italy’s stagnating economy more attractive for corporate investments and boost employment, at least from 2014.
The reform “is needed to bring Italy back into a normal competitive environment as Italian companies are not only competing domestically, they also compete globally,” said Enrico Cucchiani, who heads top retail bank Intesa Sanpaolo.
But tinkering with labour reform plans could trigger a tit-for-tat war that risks emasculating the whole project.
“If we start changing the text, we too will say there are things that we don’t like and try to modify them,” said Alfano.
Monti, an internationally-respected economist who replaced Berlusconi in November to lead the country out of a deep crisis, said the government would not budge on its proposals and that more needed to be done to help Italy return to growth.
“We cannot solve in 4-5 months the problems that have not been tackled in decades. Let’s not delude ourselves. The country is not in a brilliant condition,” Monti said.
Italy is already in recession and the central bank expects output to contract by at least 1.2 percent this year.
Markets are closely watching Monti’s progress.
“World investors have returned to finance us based on the credible promise that our public finances are in order and the credible hope that our economy can shift up a gear,” Deputy Economy Minister Vittorio Grilli told the conference.
But Spain’s public finance situation and a sudden spike in its debt yields showed contagion could easily return to the euro zone and affect Italy, Monti said.
“This is causing us big concern because their yields are rising and it wouldn’t take much to recreate trends that could spread to us through contagion,” Monti said. (Additional reporting by Catherine Hornby in Rome; Editing by Kevin Liffey)