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MENAFN - AFP - 21/11/2012

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(MENAFN - AFP) Italy's business leaders and trade unions signed an agreement Wednesday to boost flagging productivity in exchange for tax incentives as the government campaigns for growth in the recession-hit country.

The agreement includes measures aimed at giving employers greater flexibility to alter contracts and working conditions, in exchange for 2.1 billion euros (2.6 billion) in productivity tax incentives from the government until 2014.

The CGIL, Italy's biggest union, was the only social partner to refuse to agree to the deal, warning that conditions for workers would suffer.

"The deal is an important step in relaunching the economy and protecting workers' rights and social welfare," the government said in a statement.

Among other things, it will see negotiations over labour contracts dealt with at a local level and not through sector-wide collective labour agreements.

The signatories have until December 31 to outline the new rules on worker representatives to create "a more stable and efficient system".

"Over the last few years, and particularly after the crisis, Italy's economy has developed more slowly than its European and international partners, with negative effects on employment," the government statement said.

"Workers, businesses, families and young people have paid the price. Fewer jobs, lower wages, higher taxes. For this reason, productivity and modernisation are a crucial part of the government's agenda," it said.

Italy has been hit by rapidly rising unemployment figures -- particularly among the young -- since it entered into recession at the end of last year.

Prime Minister Mario Monti pushed hard for a deal to be brokered, urging business leaders and unions to do their part in boosting growth and citing a recent OECD report which has ranked Italy last out of the developed nations for productivity since 1995.

He hailed the deal as "an important step" also in terms of attracting badly needed foreign investment to Italy.

Economic Development Minister Corrado Passera said the deal would permit an increase in wages and jobs, while Luigi Angeletti, head of the UIL union, said it would "free us from the trap we've been in since the 1990s, with low salaries and low productivity".


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