ITALY – Italy’s pension reform could be delayed if the 2005 budget, being voted on by the Senate today, does not include provisions to fund tax incentives for employees and compensation for employers, a leading trade union official has warned.

Morena Piccinini, national secretary for pensions for union confederation CGIL, told IPE that the development of the second pillar, one of the most innovative aspects of the pension reform, could be postponed a year to 2006. Reform legislation was passed in July.

Piccinini said: “If the funds are not there, it is an extremely serious omission.”

Yesterday welfare minister Roberto Maroni warned that the budget, which the government has made a confidence vote, would not include funds to finance tax incentives for workers who join a pension scheme.

Maroni, a member of the Northern League party, said the budget was “getting worse and worse” and called for the economy and finance minister, Domenico Siniscalco, to explain the omission.

Piccinini said she was ”horrified” by the welfare minister’s disclosure. “Only on 1 December Maroni assured us that the funds would be made available.”

Picinnini also said workers will not be the only ones to suffer from the lack of funding.

“Employers, who are obliged to make an end-of-career payment to pension schemes lose a precious self-financing resource and will not receive compensation from the state,” Piccinini explained. According to the Italian press the annual value of the end-of-career payments, known as the TFR, is €13bn.

She added that it appeared that only the painful sides of the reform -- “the higher pension age and cuts to benefits” -- had been retailed.

“If the budget does not make funds available the development of the second pillar will all be postponed to 2006 because the budget is only voted once a year” Piccinnini concluded.

The ministry of economy & finance issued a statement saying that the development of the second pillar was “a priority” for the government following Maroni’s warning. A similar statement was made today by Siniscalco.

He told the Senate that the necessary funds would be found “through upcoming measures” but did not specify their nature. However, a ministry spokesperson told IPE that the 2005 deadline would be met.

Meanwhile, employers’ association Confindustria told IPE it would study the terms of the budget before making comments. “We have taken a wait-and-see attitude”, an official told IPE.