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Oct. 31 (Bloomberg) -- Italy’s jobless rate rose to 8.3 percent in September amid a government austerity drive aimed at shielding the euro-region’s second-most indebted country from the sovereign crisis.
The rate climbed from a revised 8 percent in August, Rome- based national statistics institute Istat said in a preliminary estimate today. Economists predicted the rate would be unchanged at 7.9 percent, the median of 10 forecasts in a Bloomberg survey of three economists showed. Joblessness among those between ages 15 and 24 rose to 29.3 percent in September, the highest since the series began in 2004, from 28 percent in the previous month.
Prime Minister Silvio Berlusconi is struggling to prevent Italy from succumbing to the debt crisis. His government has pushed through more than 100 billion euros ($139 billion) in austerity measures since July, in part to convince the European Central Bank to start buying the nation’s debt on Aug. 8 to stem surging borrowing costs.
With the global economy showing signs of slowing, Italy’s government cut its growth forecast to 0.7 percent this year and 0.6 percent in 2012, down from the 1.1 percent and 1.3 percent estimated in April. A weaker expansion will hamper efforts to reduce a debt load amounting to 1.9 trillion euros, or 120 percent of the output, the region’s second highest after Greece.
The Alenia Aeronautica unit of Finmeccanica SpA, Italy’s biggest defense contract, said on Sept. 17 that it will cut 1,200 jobs as it aims to reduce costs and increase profitability as part of a recovery plan amid “the difficult global economic situation” and cuts to “major governments’ defense budgets.”
Fiat SpA, Italy’s biggest manufacturer, has said it will leave the country if a majority of workers reject plans to boost competitiveness. Unions are concerned Chief Executive Officer Sergio Marchionne will move production out of Italy, even after securing concessions from them, as domestic sales slide and labor costs remain three times higher than in Poland.
Berlusconi vowed in a letter to the European Commission last week to overhaul labor laws to make it easier to lay off workers. The plans aim to boost hiring and not increase firing, he told Canale 5 in an interview on Oct. 28 as unions threatened to strike against the proposals.
Italy’s borrowing costs surged to euro-era highs in a bond sale on Oct. 28, a day after Berlusconi made his pledges during a summit in Brussels, where euro-area leaders agreed on measures to fight the debt crisis. The yield on the nation’s 10-year bond rose 8 basis points today to 6.08 percent.
Bank of Italy Governor Mario Draghi, who tomorrow takes over from Jean-Claude Trichet as ECB president, signaled in a speech in Rome last week that the Frankfurt-based central bank will continue to buy distressed government bonds, even as such operations remain “temporary by nature.”
--Editors: Jeffrey Donovan, Andrew Atkinson
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