Italian labour flexibility counterproductive, says Visco

(ANSA) - Athens, April 1 - Italy needs to come up with a different kind of job flexibility, because current policy has been counterproductive, central bank governor Ignazio Visco said Tuesday at an Ecofin meeting of EU finance ministers in the Greek capital.
    ''We have pursued a flexibility that has not been useful, that has been exploited by companies to reduce labor costs while putting off innovation'', the governor said.
    Italy first introduced flexible labour contracts in 1997, extending it in 2003 with the so-called Biagi law allowing various types of non-permanent contracts.
    ''We need to pursue a different flexibility, one that couples employer interests with those who need and want an education'', Visco said.
    His comments came as new data from the national statistics bureau showed unemployment in Italy rose to 13% in February, the highest level in about 37 years, with youth unemployment hitting 42.3%.
    Visco went on to say he is confident Italy's banks are in good shape ahead of forthcoming EU-wide stress tests.
    The aim is to assess banks' resilience to adverse market developments over a period of three years (2014-2016). The methodologies and scenarios for the tests are expected to be published sometime in April, with banks' individual results to be released at the end of October, according to the European Banking Authority (EBA).
    ''Italian banks have gotten busy cleaning up their act in view of the stress tests'', Visco said, adding that Italy's financial institutions have recapitalized to a great degree and ''by their own means''.
    ''Obviously their profitability is low, but the potential is there given the way these banks have managed to attract funds. This shows trust in their ability to weather the crisis'', the governor explained.
    ''Italy's banking system has faced up to the crisis with very little cash, less than any other European country'', he added.