Season Of The Strike

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Over the past two months, Italy's labor relations have become no laughing matter. In October Fiat, the nation's largest employer, announced more than 8,000 layoffs, a move that sparked a rolling series of protests. But Berlusconi, who won election largely on his image as a no-nonsense businessman, has been reluctant to take on Italy's powerful unions. When the Fiat crisis exploded, Berlusconi quickly announced his support for keeping all the plants open despite what Fiat's balance sheet — and perhaps even his own business sense — told him. After government-sponsored talks between Fiat and labor leaders, the car company announced a reversal of 1,800 planned layoffs at the Sicilian factory of Termini Imerese. "It's a step forward, but the crisis is far from being solved," warned Luigi Angeletti, leader of the moderate general union, UIL. Some suggest the government may have to buy a stake in the struggling automaker to avoid further job cuts. That was just one of the concessions Fiat workers were demanding on Friday at a protest staged outside Berlusconi's private villa near Milan.

For free market-minded Berlusconi supporters, the Prime Minister's equivocation is disappointing. Last spring Berlusconi appeared ready to begin an overhaul of Italy's system of air-tight job security protections — despite a rally of more than a million union members in March and a subsequent nationwide general strike. Many business leaders now complain that such reforms have been shelved as Berlusconi tries to hold together a bickering coalition and push through judicial reforms that critics say are designed to resolve his own outstanding legal cases. Last week Antonio D'Amato, president of Confindustria, Italy's employers' association, lashed out at the government for backing off promised pension reform. As unions threaten another nationwide strike, Italy's inflation and public debt continue to rise as growth forecasts are adjusted downward. Now Berlusconi will have to think long and hard about where he'll drop those euros. — By Jeff Israely/Rome

GREECE
Taxi drivers, doctors and gas station owners took turns last week striking for higher fares, additional staff and looser price controls. State hospitals were thrown into chaos as too few physicians tried to treat too many patients, and thousands of commuters were left stranded in Athens, unable to find a cab or fuel for their cars. Labor unrest has become something of a routine in Greece. This time the government of Prime Minister Costas Simitis refused to accept the protestors' demands. But rather than reject them outright, he promised to discuss them later.

Since the introduction of the euro earlier this year, unions have regularly taken to the streets to protest everything from the country's decrepit health system to price hikes of up to 40%. Simitis has been widely credited with putting the country's finances in order through a program of privatization and market liberalization. But as he pushes radical reforms, opposition is growing from unions with close ties to the populist wing of the ruling socialist Pasok Party that Simitis heads.

Rather than clash with the unions, Simitis has diluted or delayed crucial policies. "Picking the lesser of the two evils may be a good political ploy," says Solomon Molho, an Athens financial analyst. "But it's no sound solution to the problem." In response to massive protests last year, Simitis retreated from plans to reorganize the country's failing pension system. And he recently announced a string of early tax cuts in a bid to appease bellicose union members.

The Prime Minister is in a bind: the government can't accede to wage demands without pushing its deficit over E.U. limits, but a hard line could spark more strikes. Plus, union militancy may be scaring off foreign investors. "The role of unions has to be reassessed," says political analyst Spiros Rizopoulos. "We need foreign investment — and trade unions must become a partner in this new reality." — By Anthee Carassava/Athens

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