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Italy approves May Day labour package amid union criticism

Italian election campaign continues as election day gets closer

By Giuseppe Fonte and Alvise Armellini

ROME (Reuters) -Italy's right-wing government on Monday approved measures to boost job creation and workers' pay, amid hostile reactions from unions and opposition parties over accompanying welfare cuts and looser rules on short-term job contracts.

Prime Minister Giorgia Meloni made it easier for firms to offer job contracts lasting between 12 and 24 months and scaled back a "citizen wage" anti-poverty scheme, with the aim of encouraging able-bodied people to look for work.

Rome also earmarked around 3 billion euros ($3.30 billion) for a six-month cut in the so-called tax wedge, the difference between what an employer pays and what a worker takes home, but only for those earning no more than 35,000 euros per year.

Tax cuts would on average amount to up to 100 euros per month, Meloni said in a video statement.

"I am proud of the government choosing to celebrate May 1 (International Workers' Day) with facts instead of words," added Meloni, who won elections last year partly on promises to make Italy more business friendly.

Amid government pledges to address a national birth crisis, Rome waived taxes for this year on fringe benefits for employees with children, up to a maximum of 3,000 euros per worker.

SLIMMED DOWN "CITIZEN WAGE"

Maurizio Landini, head of the main Italian union CGIL, criticised Meloni's package, saying wages in Italy were low due to high taxes but also because of an unprecedented "level of job insecurity."

As part of a drive to loosen labour market rules, the government increased the scope for using job "vouchers", an extreme form of labour flexibility popular among businesses, which critics say leave ample room for abuses.

Spain, southern Europe's other major economy, has chosen an opposite path to labour reforms, with a centre-left government pushing through legislation to raise permanent contracts among young workers.

Under a draft seen by Reuters, Italy's government also decided that subsidies for poor people aged 18-59 will be cut to 350 euros a month, from a current average of around 550 euros per family, limited to a maximum duration of 12 months and subject to participation in job training schemes.

Poor households with minors, pensioners or disabled people will be eligible for slightly more generous payments of over 500 euros a month, for a maximum of 30 months.

Meloni introduced a further tax break, valid until December, for entrepreneurs who hire young people who are neither working nor studying, a status that has reached record levels in Italy compared to other EU nations.

($1 = 0.9095 euros)

(Editing by Sharon Singleton)