Italian labor unions protest pension overhaul

Italy’s main labor unions have staged rallies in the capital Rome to protest Prime Minster Mario Monti’s pension reforms that is expected to trap many workers in a legal limbo without retirement pay.

The plan will see the retirement age raised and that younger workers will collect smaller pensions than their parents.

Monti’s pension plan is part of a multi-billion dollar austerity package passed in January to save the country from bankruptcy, which is currently a large threat looming over the eurozone.

The three-year austerity and growth package includes budget cuts, pension reforms as well as tax hikes worth 30 billion euros (about USD51.7 billion).

Starting from this year, the retirement age for women will be increased to 62 from 60. In addition, men will have to work 42 years, up from the previous 40, to receive a full pension.

Value-added tax will be raised to 23 percent in the second quarter of 2012.

Rome has been pressured to implement economic reforms and budget cuts to reassure investors, who are concerned about the country’s huge debt ratio, which is second only to Greece.

Analysts say that an Italian default would be disastrous for the entire eurozone.

Italy, one of the biggest eurozone economies, has fallen into recession after its economy contracted by 0.2 percent in the third quarter and by 0.7 percent in the fourth quarter of 2011.

The worsening debt crisis has forced EU governments to adopt harsh austerity measures and tough economic reforms, triggering incidents of social unrest and massive protests in many European countries.