Caution Greets Italian Pension Reform Provision

August 25, 2003 ( - Conservative allies of Italian Premier Silvio Berlusconi were cautious Monday about Berlusconi's proposal to reform Italy's pension system by raising the retirement age five years.

The premier said in an interview published Sunday that Italy “needs to raise the retirement age by five years,” the Associated Press reported. “In Italy people retire at an average of 57,” he told the newspaper Libero. “How can one stop working at such a young age?”

With Italy’s aging population and declining birth rate, pension reform has been an important, but thorny issue for governments in the last decade.

Under current legislation, workers with 35 years on the job can retire if they are at least 57. Berlusconi has insisted the reform is necessary because Italy’s older population is putting an unsustainable strain on state coffers. International organizations such as the International Monetary Fund and the European Union have also pressured Italy to rein in its deficit.

“We start off every year with a 70-trillion lire ($39 billion) pension deficit,” Berlusconi said, according to the AP. However, he added, he wanted to get the backing of his two key allies, National Alliance and the Northern League. “I will convince them,” he told Libero. “On September 1, I will lay down some very strict conditions.”

Both allies reacted cautiously to the retirementp-age change suggestion. For his part, Labor Minister Roberto Maroni, a top League official, said he agreed with the premier’s proposal on principle, but added the reform should introduce “incentives” to keep people working five years longer. He ruled out any reform forcing workers to stay.

Meanwhile, National Alliance’s Ignazio La Russa warned the matter would not be solved in the first two weeks of September. He also noted that unions, which have already announced their opposition to the plan, would have to be dealt with. “If they upset our pension system, we’ll fight against it,” said Savino Pezzotta, leader of the CISL union.