Italy cracks down on temporary work, firms that move abroad

By Gavin Jones

ROME (Reuters) - Italy's new government will limit temporary job contracts and penalise firms that move production offshore in its first big economic legislation, which is aimed at increasing job security.

This was an election battle cry of Labour Minister Luigi Di Maio, leader of the anti-establishment 5-Star Movement which has governed with the right-wing League since June 1.

The package of measures passed on Monday, which Di Maio has dubbed the "dignity decree", also includes a ban on advertising of all forms of gambling, which 5-Star says hurts families' finances and targets the weakest members of society.

"It was a social emergency that needed to be tackled immediately," Di Maio, who is also deputy prime minister, said on RAI state TV on Tuesday.

Advertising contracts that have already been signed will not be affected, but they cannot be renewed.

The decree, which must be approved by parliament within 60 days, aims to fulfil one of Di Maio's campaign promises to stop the abuse of temporary contracts after former Prime Minister Matteo Renzi passed a law to liberalise their use.

To discourage such contracts, the package increases costs for firms that use them, and reduces the number of times they can be renewed to a maximum of two years from three.

"Whoever has not been over using these contracts and taking advantage of people has nothing to fear," Di Maio said on RAI.

RIGID RULES

Most of Italy's employers' associations, whose members make heavy use of temporary contracts, have criticised the plans.

"I think it's a mistake, you don't increase work by making the rules more rigid," Vincenzo Boccia, head of industry lobby Confindustria, said last week of the planned decree.

Italy has repeatedly reformed its hiring and firing rules in recent years but has failed to overcome a "dual" labour market in which older workers hired under previous, rigid rules enjoy strong job protection, while younger people usually find only temporary work with few rights or benefits.

Some 434,000 temporary jobs were created in the 12 months to May, the most recent figures show, but permanent contracts stagnated, rising by only 5,000.

Attempting to keep work in Italy, the decree rules that firms that have received state financial support or tax breaks and then move their production abroad must pay back the money they received, and can also be fined.

Those that relocate outside Italy within 5 years of receiving government funds must pay back between double and four times the amount received.

(Additional reporting and writing by Steve Scherer; Editing by Alexander Smith)