Italy's govt seeks to open competition

COLLEEN BARRY
Associated Press
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Italian Premier Mario Monti holds a press conference in Rome Friday, Jan. 20, 20112, to announce the Italian government has approved hotly contested emergency measures to open competition in a wide-range of sectors aimed at boosting growth and making room for young people in the workforce. The measures approved Friday are the second prong in Premier Mario Monti's efforts to protect Italy from sovereign debt crisis, following a €30 billion ($39 billion) austerity package in December 2011. (AP Photo/Mauro Scrobogna,LaPresse) ITALY OUT

MILAN (AP) — Italy's government approved hotly contested emergency measures Friday to open competition in a wide range of sectors aimed at boosting growth and making room for young people in the work force.

The measures, dubbed "Grow Italy," are the second prong in Premier Mario Monti's efforts to protect Italy from sovereign debt crisis, following a euro30 billion ($39 billion) austerity package nicknamed "Save Italy" that was passed in December. The emergency measures take immediate effect, but must be approved by Parliament to be converted to law.

The measures, among other things, will allow more taxi licenses, permit pharmacists to discount some medicines, and allow gas stations operators to freely choose their suppliers.

Monti, a former EU competition commissioner, is keen that doing away with privilege and increasing competition are the best ways at spurring economic growth, which has been stuck near zero in Italy for a decade. Growth, in turn, is seen as the most effective way to reduce the country's dangerously high sovereign debt of euro1.9 trillion, or 120 percent of GDP.

Italy is expected to enter a recession this quarter. The International Monetary Fund forecasts the Italian economy will contract in 2012 by 2.2 percent, while the Confindustria industrial lobby puts the shrinkage at 1.6 percent.

"More competition also means more opening, more space for the young, less space for ... privilege and more recognition for merit," Monti told a press conference. "It is not just a big economic operation, but also a big social action."

One Italian in four under 30 is not in education, employment, or training.

Taxi drivers have been staging wild cat strikes for days, and have called an official strike for Monday, against plans to limit licenses. Other categories, from gas station operators to lawyers, were also poised to announce strikes and sit-ins.

The Cabinet, which discussed the measures for eight hours during which they also approved new infrastructure spending, made changes to the measures after receiving input from various sectors. In the case of taxi drivers, the government decided that an authority will decide city by city if the number of licenses should be raised or reduced. If more licenses are issued, drivers who already have one will receive "tangible" compensation. Taxi drivers also will be able to have a part-time license, for the first time.

The measures also seek to open "closed professions" such as notaries public, to allow more access to lucrative professions that often run in families.

Government-controlled Eni oil company also will have to sell off its gas distribution unit Snam Rete Gas, to reduce costs and spur investments, said Corrado Passera, the economic development and infrastructure minister.

Monti said the Cabinet next Friday will consider measures to simplify the bureaucracy, often cited as an impediment to investment.

He also expressed satisfaction that Italy's borrowing costs on the secondary market have been dropping.

Earlier, the government approved the release of euro5.5 billion ($7.1 billion) from state coffers to fund strategic infrastructure projects, including railway lines in the poorer south, public housing and school projects and environmental safety measures to secure areas vulnerable too natural calamities like landslides.

The money is on top of euro4.8 billion approved in December for highway projects and high-speed railways.

Monti has combined the economic development and infrastructure ministries to ensure strong coordination of projects that can promote economic growth.

Economists have mixed views on how effective infrastructure programs are for spurring economic growth, with most favoring privately funded projects for better stimulus. Still, longer-term projects such as railways usually require state funding because the investment period is too long for many investors.