Italy vows to slash government jobs in new austerity measures

Italy vows to slash government jobs in new austerity measures

ALESSANDRA RIZZO

ROME— The Associated Press

Published Saturday, Aug. 13, 2011 11:12AM EDT

Last updated Saturday, Aug. 13, 2011 11:33AM EDT

Italy's government vowed Saturday that its new austerity package will slash the country's huge bureaucratic costs, with thousands of jobs and local elected posts being gradually eliminated as small towns consolidate.

Prime Minister Silvio Berlusconi has even called the cuts “excessive,” but said they were approved because widespread discontent among citizens over the perks enjoyed by Italy's political elite.

The government on Friday approved the €45.5-billion (US$64.8-billion) in emergency measures over two years to balance the budget by 2013 in response to demands by the European Central Bank. The package — a mix of spending cuts and tax increases, including a “solidarity tax” for high-earners — aims to calm market turmoil and make sure Italy is not the next victim of Europe's debt crisis.

Cabinet Minister Roberto Calderoli said Saturday the number of national legislators, currently almost 1,000, would be halved — though this requires a lengthy constitutional process.

He said provincial administrations for towns with less than 300,000 people or smaller than 3,000 sq. kilometres will be abolished. Provincial administrations — in-between municipalities and regions — are seen by many as redundant and expensive.

While the exact number will be determined by a fall census, the measure is expected to affect between 29 and 35 provincial governments, Mr. Calderoli said. Newspaper La Repubblica said these include Siena, Trieste and Prato, an important business centre outside Florence.

Towns with fewer than 1,000 residents will merge with larger communities, a change that affects about 1,970 municipalities out of 8,094 nationwide, according to the government.

These cuts mean that some 5,000 elected jobs will be slashed, plus several thousand related jobs, Mr. Calderoli said. The measures will take effect at the next local elections.

The issue of excessive administration has been a mainstay of the Italian political debate for years. But citizens have expressed new outrage recently that Italy's political class was being spared fro cuts.

Some critics said the measures didn't go far enough, others said they targeted mostly local administrations.

However, legislators in Rome saw their “solidarity tax” doubled compared to other citizens, who face a five per cent additional tax on income above €90,000 ($128,250) and a 10 per cent additional tax on income above €150,000 ($213,750).

Rome already passed a €70-billion ($99-billion) austerity package last month, but the government says the financial situation has deteriorated significantly since then. Under intense pressure from the European Central Bank and eurozone political leaders, the government agreed to speed its goal of balancing the budget to 2013 instead of 2014, and to come up with structural reforms that stimulate investment and growth.

The news measures were passed in an emergency decree approved by the cabinet. The decree is effective immediately but must be turned into law by parliament within 60 days.