Italy's Labor Pains

Italy, what's happened to all of its defending champions?

If you want to know which of Italy’s many problems is the most daunting, look no further than the first sentence of its constitution, written in 1947, which describes the country as “a democratic republic, founded on labor.” That foundation has begun to crumble. Italy’s economy can no longer afford the generous benefits it showered on its workers in the 1960s, when the country grew 5 percent to 6 percent a year.
How serious is the labor issue? The laws are so unclear that many dismissals of workers end up in the country’s dysfunctional court system, where if a judge decides a worker was let go unfairly, he will likely rule that the employer has to reinstate him with back pay for the time he was gone.
Italian work contracts are negotiated nationally. Union leaders and employer federations set pay scales, benefits packages, and employment conditions for entire classes of workers—metal mechanics, textile laborers, construction workers, journalists, even maids and nannies. Workers—especially public employees—are guaranteed the same wage wherever they live.
The result is crippling. The World Economic Forum ranks Italy 123rd out of 142 countries in the efficiency of its labor market. Employers are robbed of their ability to innovate, from experimenting with hours of operations to introducing new forms of wage structures.
Another way for a worker or small entrepreneur to avoid becoming entangled in red tape is to opt out of the formal economy altogether. Anywhere from 15 percent to 27 percent of economic activity is underground, according to the Organization for Economic Cooperation and Development and the International Monetary Fund.

As long as Europe and the U.S. held a technological edge over the developing world, Italian companies could afford some inefficiencies. Globalization now means a worker in Warsaw or Shenzhen is just as likely to be sitting at a modern workstation as his counterpart in Detroit or Torino. If Italy wants its workers to be paid more than those in emerging markets, it can’t afford a frozen labor market.
Newly appointed Prime Minister Mario Monti must reform a country where free-market ideas don’t have a political base. There is one way to build public support for change. Italy supports a class of workers who, though universally despised, are the most pampered in the country. That is the bad part about Italy, and they should get their attention straight on ITALY.
So from my suggestion maybe  Italy should make their new point of equilibrium and adjust their economic crisis to their new point , and arrange it.