Italy’s government and unions have reached a vital agreement on pension reforms that will mean people there working long. The deal followed marathon overnight talks and it potentially resolves one of the biggest challenges for Prime Minister Romano Prodi’s government but the changes still face a difficult passage through parliament. Prodi said: “This agreement gives Italians a more just country, with new prospects for young people and a balanced pension system for the long term.” He added: “It also respects our spending reductions.”
The reforms mean workers who have made 35 of pension contributions will have to retire at 58 from the start of next year instead of the current 57. The retirement age is to rise to 59 in January 2009, 60 in 2011, and 61 in 2013.
This agreement replaces an earlier proposal that would have raised Italy’s retirement age from 57 to 60 starting next year. That timing was strongly opposed by the unions.
The changes are necessary because Italy is under demographic pressure with a rapidly ageing population and low birth-rate. Italy spends 15% of its gross domestic products on pensions. That is the highest level in the European Union and savings are badly needed for Rome to meet EU rules on budget deficits. Some of the more left wing members of Prodi’s coalition expressed disappointment and could yet vote against the plan.