Italy’s Prime Minister Matteo Renzi. Photo: ReutersItaly’s Prime Minister Matteo Renzi. Photo: Reuters

The head of Italy’s biggest union yesterday threatened to strike in protest at plans to scrap job guarantees, a key part of Prime Minister Matteo Renzi’s long-awaited labour market reform.

The comments by CGIL leader Susanna Camusso came hours before a meeting of Renzi’s centre-left Democratic Party where the 39-year-old premier is expected to take on party leftists who back the union’s demand to leave the guarantees in place.

“The CGIL is ready to go on strike,” she told reporters after a meeting with leaders of the two other main unions, the CSIL and the UIL, repeating threats made earlier this month when draft legislation began its passage through Parliament.

Renzi, under mounting pressure to match his ambitious promises with results, has staked his credibility on the labour reform, accusing the left of waging an ideological battle over outdated rules that unfairly favour some workers but leave others in the cold.

Job creation is an urgent priority for Renzi, who promised reform

That has set him on a collision course with leftwingers and traditionalists in his party, such as former Prime Minister Massimo D’Alema, who say his policies are a sop to European Union partners pressing him for tangible economic reforms.

With the economy set to contract for a third year running in 2014 and unemployment at levels not seen since the 1970s, job creation is an urgent priority for Renzi, who came to power in February promising sweeping reforms to lift Italy out of its worst slump since World War II.

The job protection measures, in Article 18 of the workers’ statute, guarantee that employees dismissed without proper justification must be reinstated, but they only cover those on fixed full-time contracts in larger companies.

Fiercely defended by unions, whose shrinking power base is in Italy’s declining heavy industry and public service, they leave workers in small firms as well as a growing army of often younger workers on insecure short-term contracts, with virtually no protection or welfare support.

Renzi has proposed replacing the complicated mass of short-term contracts with a simpler system in which worker protection would increase with seniority, leaving employers free to lay off staff in the early years of their employment.

That is rejected by unions who say that, instead of scrapping Article 18, protection should be extended to all workers.