Big business, unions plead for Italy political deal

ROME (AFP) - Big business and trade unions in Italy are pleading for a swift end to a political deadlock that may already have cost the economy 1 per cent of gross domestic product.

The main employers' lobby Confindustria and the powerful unions rarely see eye to eye. But the economic and political crisis are pushing them together more than ever before.

A general election in Italy in February was narrowly won by the left but no party has been able to form an overall majority in parliament, stalling the creation of a government.

Ms Susanna Camusso, leader of Italy's biggest union, the CGIL, has warned that the country is being swept by "a perfect storm" in its worst recession since the post-war period.

With unemployment at near record highs, she has called for up to 1.0 billion euros (S$1.6 billion) to be set aside by the government to pay redundancies and avert social disaster.

Confindustria head Giorgio Squinzi has also issued increasingly drastic warnings to ask bickering political parties to set aside their differences and form a new government.

"If businesses close, the country dies," he said at a conference on Saturday, ahead of a key week for politicians who will have to vote on a new president in parliament from Thursday.

Analysts say some common ground may emerge this week as the successor to 87-year-old President Giorgio Napolitano has to be voted in with at least a majority in parliament.

The economy meanwhile is in a terrible state.

More than a million people lost their jobs last year - a 14-percent increase from 2011.

Unemployment is at 11.6 percent and the youth jobless rate has reached 37.8 percent.

Suicides linked to economic hardship have increased sharply over the past year.

This month, a couple in their 60s hanged themselves because they could no longer afford the rent - a case that shocked the nation.

The wife was on a pension of 500 euros a month, while her husband had no revenue because he was made redundant before reaching the minimum age for a pension.

The desperate situation faced by many in a previously stable middle class in the eurozone's third largest economy is ringing alarm bells for Confindustria and the unions.

"We are all in the same boat and we have to row in the same direction," Mr Squinzi said.

The new government must be made up of "people of good will who have their country's interests at heart and can extricate it from the quicksand," Mr Squinzi has said.

"The real economy is not waiting," he said, adding that the delay had already caused the economy to lose one percentage point of GDP.

Ms Camusso has also called for change and blames the current social crisis on austerity imposed by outgoing Prime Minister Mario Monti.

"If we do not put on the brakes (on austerity), the decline will continue," she said earlier.

She said the tax burden faced by both businesses and workers is becoming "unsustainable" and will hit a particularly critical point in June and July.

Mr Aurelio Regina, the deputy head of Confindustria, said: "We are walking on the edge of a volcano. The danger is that part of our industrial system will be destroyed.

Mr Walter Passerini, a columnist for La Stampa daily, has advocated a type of "shock therapy" that could put growth and jobs back at the centre of the political agenda.

Despite all the doom and gloom, some business owners are trying to stay optimistic.

Italy "can go quickly from being bottom of the class to first," said Mr Paolo Ronchetti, owner of Equilibrium, a small business making environmentally-friendly construction products.

He added: "It's just a question of patience, of working well, of making things that are high quality and the results will come."

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