This post originally appeared at Italy Chronicles.Italy’s Prime Minister Mario Monti is in full liberalization swing. I know that Monti does not like the term “liberalization” applied to what he and his government are trying to do – maybe “normalization” is a more appropriate term, in that what Monti is attempting to do is to steer Italy in the direction which countries like the UK and USA have been following for years.
In the USA and UK, and a good few other countries, professions and various business sectors do not enjoy protectionist laws which artificially distort; some may say “stifle” ; the markets in which they operate.
OK, so the USA and the UK are not without their problems, but Monti is no fool and is well aware of how other economies work or do not, as the case may be.
What Monti may do is to take aspects of functional countries which work and apply them to Italy, whilst, at the same time, modifying those aspects which do not work so well to ensure they do.
Persuading Italy to work well is proving to be no mean feat. The various sectors Mario Monti is striving to straighten out are already kicking up one heck of a fuss.
Sicily on Strike
So far, there have been strikes down in Sicily which, according to reports have cost the economy of Italy’s quirky island something like €50 million. Contacts of mine down in Sicily have been commenting that the strikes down in Sicily have not merely been led by those fearful for their futures, but also by other interest groups including organised crime and far right political agitators which are feeding on discontent and fear. Certainly, if Monti does sort things out, opportunities for making a quick buck off corruption will be reduced.
While not confirmed, it is alleged by some that Silvio Berlusconi may be encouraging what has been going on down in Sicily. Perhaps it may be more accurate to say that he has not been discouraging the Sicily troubles. For reasons which are not entirely clear, Berlusconi’s party has always obtained numerous votes from Sicily’s population.
Down in Sicily, transport companies have been static, gas/petrol stations have virtually run out of fuel and from what I’ve been told, intimidation has been employed in an attempt to convince some to participate in the strikes and protests. Not all of Sicily’s people agree with what has been happening but many are powerless and either unwilling or afraid to make their voices heard.
Now, it seems that the protests which have disrupted life in Sicily are to move to Rome and elsewhere.
From this week on, Italy’s taxi drivers, lawyers, pharmacists, service station operators and more transport companies will strike. Doctors, another target of Monti’s manoeuvrings, may also take industrial action, is so far as what they do is industrial. Italy’s railway staff are expected to jump on the strike bandwagon sooner or later over plans to swap national employment contracts for local ones.
It is also possible that Italy’s notaries may decide to strike over Monti’s plans to reduce their little lucrative monopoly.
To cap it all, Italy’s trades unions may well call a national strike if Monti actually moves towards changing the sacrosanct Article 18 of Italy’s Statute of Workers. Changing Article 18 will help companies remove, OK, sack, employees who are not pulling their weight. Italy’s unions, on the other hand, fear that any modification to Article 18 will mean that sackings will become indiscriminate and that the threat of sacking will probably be used as a means of intimidation by unscrupulous employers.
Changes to Article 18 will only be accepted by Italy’s unions if some form of protection is granted to employees – such as United Kingdom style employment tribunals, for instance.
What ever happens, more strikes are sure to follow in 2012, even if Monti is optimistic about the results of his attempts to normalize Italy.
Italy’s GDP May Grow by 11%
As has been pointed out, Monti’s attempt to normalize Italy is not at all popular in some quarters, despite his claiming that as a result, Italy’s GDP stands to grown by 11% and salaries may also rise by up to 12%. Not only this, but the measures Monti is taking may well produce an annual saving for Italians of €400 each.
To some, Monti’s claim for a huge rise in GDP may seem exaggerated, but I suspect they may even be on the conservative side. Italy has, as I have often commented, an enormous amount of potential and should be the number 1 economy in Europe.
Dealing With Discontent
As for dealing with the discontent, one is certain Monti expected the trouble as well as the tactics and tricks of Italy’s power mongers, such as Silvio Berlusconi.
Monti seems to be quietly confident and he does have good reason to be in that it is highly probable that he enjoys the support of the majority of Italy’s population.
The next stop for fast moving Monti and his team, which have done more in a couple of months than any former Italian government has achieved in decades, is to cut down Italy’s idiosyncratic and Machiavellian bureaucracy. Once could say that Monti has been freeing up the cogs and now wants to ensure they are well lubricated.
Courts of Business Law
One proposed change which caught this Italy watcher’s eye, was a proposal for special business law courts which would deal elusively with aspects of company law, thus removing the burden from Italy’s overworked and excessively slow legal system.
Another obvious advantage of such specialist courts will be the creation of specialist judges who will be expert in company law and related legal issues. This is a move which, if it takes place, is to be welcomed.
Those who will be content to see such a change will not only been Italian business owners, but also foreign businesses who shy away from investing in Italy on account of its horrendously complex, slow and unpredictable legal and court system. Foreign direct investment levels may well grow as a result, as, of course, will jobs.
For the moment, Monti continues to enjoy the support of the majority of Italy’s political parties, even if Silvio Berlusconi is not overly happy that the system he worked to create may well end up being unravelled.
Hollow Threats from the Lega
The only major opposition to Monti comes from the small Northern League party run by Umberto Bossi. Bossi, in a rally in Milan yesterday, called upon Berlusconi to withdraw his support for Monti or else risk losing the support of Bossi’s cohorts in the event of elections. To all intents and purposes, the threats of the Northern League are not much more than a a case of a wasp threatening a grizzly bear. Without an alliance, the Northern League is nothing. And if Berlusconi dumps Bossi and Co, it is going to be extremely difficult indeed for Bossi to find other allies.
The normalization of Italy is continuing and Monti, one suspects, will overcome each of the obstacles he faces one by one, coolly and professionally.