ITALY- The leaders of the governing coalition would be prepared to axe some of the most controversial features of the planned pensions reform - but changes might halt the development of the second pillar, the employer’s body, Confindustria, said.

Any alternative plan that would save 0.7% of gross domestic product and see no changes occur before 2008 could be a matter for discussion, welfare minister Roberto Maroni is reported to have said.

The opposition called the change of heart “a spectacular change of positions”.

Italian financial daily, Il Sole 24 Ore, reported that Maroni said he had “no prejudice against the hypothesis of gradualness nor against keeping the double channel of access”.

The minister, however, maintained the pension reform would not be postponed until 2005.

The “double channel of access” is a two-tear system, which has so far allowed 57 year-old Italian workers with 35 of accrued contribution or workers with 40 years of accrued contribution to retire, no matter at what age. It was to be one of the most defining features of the intended reform, but has proved widely unpopular with the three leading trade unions, Gigl, Cisl and Uil.

The report comes as a surprise for the opposition, since the government had seemed so far in favour of pushing the pension age to 65 for men and 60 for women.

One of the opposition leaders, Francesco Rutelli, commented on the move: ”On the pension matter, I dare say, we did not get it wrong, considering that the government has changed its position in a spectacular fashion.”

Further amendments to the pension-reform plan could be yet in store.

The government would not require workers to invest the trattamento di fine rapporto, TFR, an indemnity workers receive at the end of his career, in the second pillar but would accept the so-called “silent assent” principle.

Silent Assent, “silenzio assenzo’, which would allow the worker to forbid the investment, is popular with Cgil, Cisl and Uil.

The government would also change its position on the subject of “decontribuzione” , which would cut the rate of contribution from 32% of the worker’s monthly ages, 28% of which is paid by the employer, to 27%.

Confindustria has reacted to the possible cancellation of decontribuzione, saying: ”The spirit that prompted the reform, based on the pact between young and older workers, would be altered. A fundamental measure for the sustainability of employment would be annulled.”

Confindustria also said the changes, expected to be endorsed by the government and presented to the unions by next week, would not tackle the high cost of labour and would indirectly halt the development of the second pillar.