LABOR ANTIPASTI FOR ITALY

UNCLAS SECTION 01 OF 03 ROME 001360

SIPDIS

DEPT FOR DRL/IL, EUR/WE, EB/OMA, INR/EUC
DOL FOR ILAB/PERLMUTTER, BRUMFIELD, LEVINTOW
TREASURY FOR OASIA HARLOW, CARNES

E.O. 12958: N/A
TAGS: ELAB ECON PGOV PINR ECON PGOV PINR ECON PGOV PINR IT ITELAB ITELAB
SUBJECT: LABOR ANTIPASTI FOR ITALY

UNCLASSIFIED

PAGE 02 ROME 01360 01 OF 03 311336Z
REFTELS: A) ROME 579 B) 02 ROME 5750 C) 02 ROME 5139


1. INTRODUCTION: THIS CABLE IS THE FIRST IN A PERIODIC
SERIES REPORTING RECENT DEVELOPMENTS AND TRENDS CONCERNING
ITALY'S LABOR MARKET, LABOR-MANAGEMENT RELATIONS AND TRADE
UNION ACTIVITIES. THE ITEMS INCLUDED ARE USEFUL TIDBITS;
SMALL DISHES (ANTIPASTI IN LOCAL PARLANCE) OF INFORMATION TO
SUPPLEMENT MORE DETAILED REPORTING ON MEATIER SUBJECTS.
COMMENTS, QUESTIONS OR REQUESTS FOR ADDITIONAL INFORMATION
SHOULD BE DIRECTED TO LABOR COUNSELOR JOHN BASS
(BASSJR@STATE.GOV) OR LABOR SPECIALIST GAETANO PELLICANO
(PELLICANOG@STATE.GOV)


2. ON THIS EDITION'S MENU:

-- GOVERNMENT SERVES UP 2002 EMPLOYMENT DATA; GAINS
OUTSTRIP GDP GROWTH RATE
-- POLITICALLY-MOTIVATED STRIKES CHOKED THE COUNTRY IN 2002
-- ITALIAN EDUCATIONAL SYSTEM DOESN'T CUT THE MUSTARD
-- NEW PUBLIC SECTOR CONTRACT STEAMS EMPLOYERS
-- EMPLOYERS, TRADE UNIONS STEWING OVER DECLINING INDUSTRIAL
COMPETITIVENESS
-- PARLIAMENT COOKS UP SWEEPING EDUCATION REFORM

2002 EMPLOYMENT GAINS OUTSTRIP GDP GROWTH, ESPECIALLY IN
SOUTH
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3. THE ITALIAN ECONOMY ADDED 315,000 JOBS IN THE FORMAL
SECTOR IN 2002, AN INCREASE OF 1.5 PERCENT, ACCORDING TO THE
NATIONAL STATISTIC INSTITUTE'S ANNUAL SURVEY. ALTHOUGH THE
ECONOMY ADDED FEWER JOBS THAN IN EITHER OF THE TWO PRECEDING
YEARS, THE MODEST GROWTH IN EMPLOYMENT NONETHELESS EXCEEDED
THE MINIMAL 0.4 PERCENT GROWTH IN GDP. PAYROLL EMPLOYMENT
ACCOUNTED FOR ALL OF THE GROWTH; THE NUMBER OF SELF-EMPLOYED
ITALIANS DECLINED SLIGHTLY (BY 18,000). SLIGHTLY OVER ONE-
THIRD OF THE NEW POSITIONS, OR 115,000, WERE PART-TIME OR
FIXED-TERM. EMPLOYMENT AMONG WOMEN GREW AT 2.2%; OVER HALF
THE NEW JOBS CREATED WENT TO WOMEN. REGIONALLY, GROWTH IN
EMPLOYMENT WAS STRONGEST IN THE CHRONICALLY UNDERDEVELOPED
SOUTHERN REGION (1.9 PERCENT),FOLLOWED BY THE CENTER (1.8
PERCENT) AND NORTH (1.1 PERCENT),ALTHOUGH NORTHERN ITALY
CREATED THE MOST JOBS (123,000) OF THE THREE REGIONS.
TRADITIONALLY LARGE REGIONAL DISPARITIES IN UNEMPLOYMENT
CONTINUED: THE ANNUAL UNEMPLOYMENT RATE IN NORTHERN ITALY
WAS 4 PERCENT; IN CENTRAL ITALY, 6.6 PERCENT; AND IN
SOUTHERN ITALY, 18.3 PERCENT. THE BERLUSCONI GOVERNMENT
SIMULTANEOUSLY TOOK CREDIT FOR THE MODEST GOOD NEWS AND
CITED THE ENORMOUS REGIONAL DISPARITIES AS FURTHER EVIDENCE
OF THE NEED FOR RAPID IMPLEMENTATION OF ITS PACKAGE OF LABOR
MARKET REFORMS (APPROVED BY PARLIAMENT, PENDING
IMPLEMENTATION REGULATIONS BY THE LABOR MINISTRY - SEE REF
A).

STRIKE TOTALS SKYROCKETED IN 2002, LARGELY FOR POLITICAL
REASONS
-------------- --------------


4. ITALIAN WORKERS SPENT OVER 4 MILLION MAN-DAYS ON STRIKE
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IN 2002, A 355-PERCENT INCREASE OVER THE PRECEDING YEAR,
ACCORDING TO NATIONAL STATISTICS INSTITUTE ISTAT. ROUGHLY
32.7 MILLION MAN-HOURS WERE LOST TO STRIKES, UP FROM 7.2
MILLION MAN-HOURS IN 2001. OVER 85 PERCENT OF THE LOST TIME
- SOME 27.5 MILLION MAN-HOURS - STEMMED FROM STRIKES CALLED
FOR MOTIVES UNRELATED TO BARGAINING OR OTHER ELEMENTS OF
LABOR RELATIONS. IN 2001, ISTAT REGISTERED ONLY 144,000 MAN-
HOURS LOST TO STRIKES FOR REASONS OTHER THAN LABOR
RELATIONS. THE HUGE INCREASE REFLECTS PRIMARILY DECISIONS
BY THE TRADE UNION CONFEDERATIONS (ESPECIALLY CGIL, THE
LARGEST AND MOST LEFT-LEANING POLITICALLY) TO CALL SEVERAL
NATIONAL STRIKES TO PROTEST BROAD GOVERNMENT POLICY. OF
THOSE HOURS LOST TO STRIKES UNDERTAKEN FOR TRADITIONAL LABOR
MOTIVES, OVER SIXTY PERCENT WERE CONCENTRATED IN THREE
SECTORS: METALWORKERS (1.8 MILLION MAN-HOURS, OR 34.8
PERCENT); PUBLIC ADMINISTRATION AND GOVERNMENT EMPLOYEES
(833,000 MAN-HOURS, OR 16 PERCENT); AND TRANSPORT AND
TELECOM (532,000 MAN-HOURS, OR 10.2 PERCENT).

ITALIAN EDUCATIONAL SYSTEM NOT MEETING WORKFORCE NEEDS
-------------- --------------


5. ITALY HAS THE LOWEST RATE IN THE EUROPEAN UNION OF
MATCHING STUDENTS AND TRAINEES TO JOBS THAT REFLECT THEIR
SPECIALIZED STUDIES AND PREPARATION, ACCORDING TO A RECENT
EUROSTAT STUDY. 47 PERCENT OF YOUNG ITALIANS WORK IN A

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UNCLASSIFIED PTQ7720

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ACTION DRL-01

INFO LOG-00 NP-00 AGRE-00 AID-00 CEA-01 CIAE-00 COME-00
CTME-00 INL-00 DINT-00 DODE-00 ITCE-00 DOTE-00 ANHR-00
SRPP-00 DS-00 EB-00 EXME-00 EUR-00 OIGO-00 E-00
FAAE-00 FBIE-00 UTED-00 VC-00 FRB-00 H-01 TEDE-00
INR-00 ITC-01 LAB-01 L-00 VCE-00 AC-01 NSAE-00
NSCE-00 OMB-01 OPIC-01 PA-00 PM-00 PRS-00 ACE-00
P-00 SP-00 SSO-00 SS-00 STR-00 TEST-00 USIE-00
PMB-00 DSCC-00 PRM-00 G-00 SAS-00 /008W
-------------- 4D9EB4 311338Z /38
R 311337Z MAR 03
FM AMEMBASSY ROME
TO SECSTATE WASHDC 9033
INFO DEPT OF LABOR WASHDC
DEPT OF TREASURY WASHDC
LABOR COLLECTIVE
EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 02 OF 03 ROME 001360

SIPDIS

DEPT FOR DRL/IL, EUR/WE, EB/OMA, INR/EUC
DOL FOR ILAB/PERLMUTTER, BRUMFIELD, LEVINTOW
TREASURY FOR OASIA HARLOW, CARNES

E.O. 12958: N/A
TAGS: ELAB ECON PGOV PINR ECON PGOV PINR ECON PGOV PINR IT ITELAB ITELAB
SUBJECT: LABOR ANTIPASTI FOR ITALY

UNCLASSIFIED

PAGE 02 ROME 01360 02 OF 03 311337Z
SECTOR DIFFERENT THAN THAT OF THEIR FIELD OF STUDY, COMPARED
TO 29 PERCENT IN THE NETHERLANDS, 35 PERCENT IN FRANCE AND
40 PERCENT IN GREECE. THE PHENOMENON IS THE RESULT OF BOTH
ECONOMIC AND CULTURAL FACTORS, NOTABLY HISTORICALLY POOR
INTEGRATION OF THE LABOR MARKET WITH EDUCATION AND TRAINING
SYSTEMS. ITALY'S CURRENT EDUCATIONAL SYSTEM IS LARGELY THE
PRODUCT OF 1920'S, FASCIST-ERA LEGISLATION, CONCENTRATING ON
CLASSICAL CORE CURRICULA THAT PROVIDES EXCELLENT PREPARATION
FOR THOSE HEADED TO UNIVERSITY BUT DOES NOT PREPARE OTHER
STUDENTS FOR THE TYPES OF EMPLOYMENT OPPORTUNITIES AVAILABLE
IN AN ADVANCED INDUSTRIAL AND INFORMATION ECONOMY.
INCREMENTAL REFORMS IN RECENT YEARS FAILED TO CORRECT THIS
FUNDAMENTAL WEAKNESS; A RECENT EDUCATION REFORM PACKAGE MAY
DO BETTER (SEE LAST ITEM).


6. ITALY WAS ALSO LATE IN DEVELOPING A TRAINING SYSTEM FOR
UNEMPLOYED PEOPLE AND IN ADOPTING THE "LIFE-LONG LEARNING"
CONCEPT. PROGRAMS IN BOTH AREAS DID NOT BEGIN UNTIL THE EU
STARTED CO-FINANCING PROGRAMS IN THE NINETEEN-EIGHTIES
DEVOTED TO REDUCING THE UNEMPLOYMENT RATE. EVEN AFTER THESE
NEW INITIATIVES, TRAINING AGENCIES HAD LIMITED CAPABILITIES
TO EVALUATE THEIR EFFECTIVENESS IN MATCHING POTENTIAL
EMPLOYEES TO THE LABOR MARKET DEMANDS; PUBLIC/GOVERNMENT
EMPLOYMENT SERVICES WERE PRIMARILY BUREAUCRATIC OPERATIONS
CERTIFYING EMPLOYMENT OR UNEMPLOYMENT STATUS. PUBLIC
TRAINING PROGRAMS WERE VIEWED LARGELY AS AVOCATIONAL,
ALLOWING INDIVIDUALS TO PURSUE PERSONAL INCLINATIONS, RATHER
THAN AS STRATEGIC TOOLS TO ADDRESS EMPLOYERS' REQUIREMENTS
FOR WORKERS WITH SPECIFIC SKILLS OR EXPERTISE. THE RESULT
HAS BEEN A REMARKABLE MISMATCH BETWEEN SUPPLY AND DEMAND OF
WORKERS. UNEMPLOYED ITALIANS OFTEN SPEND TWO TO THREE YEARS
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PAGE 03 ROME 01360 02 OF 03 311337Z
LOOKING FOR EMPLOYMENT CONSISTENT WITH THEIR EDUCATION AND
OFTEN END UP ACCEPTING ALMOST ANY JOB THEY CAN FIND.

NEW PUBLIC SECTOR CONTRACT STEAMS PRIVATE EMPLOYERS
-------------- --------------


7. ON FEBRUARY 27, ARAN (THE OPM-EQUIVALENT THAT REPRESENTS
PUBLIC MINISTRIES) AND THE THREE LARGEST UNION
CONFEDERATIONS SIGNED A NEW CONTRACT. THE PACT ESTABLISHES
NEW REGULATIONS AND SALARIES FOR PUBLIC EMPLOYEES OF THE
CENTRAL ADMINISTRATIONS, IN ACCORDANCE WITH THE OVERALL
AGREEMENT ON BARGAINING ESTABLISHED IN 1993. THE THREE
MAJOR CONFEDERATIONS PUT ASIDE THEIR DIFFERENCES OVER
BARGAINING PRIORITIES FOR PRIVATE SECTOR CONTRACTS (WHICH
ARE NEGOTIATED NATIONALLY FOR EACH INDUSTRIAL/SERVICE
SECTOR) AND THE GOVERNMENT'S LABOR MARKET REFORM PROPOSALS
TO PRESENT A UNITED BARGAINING FRONT ON THE PUBLIC SECTOR
CONTRACT. AS A RESULT, THEY SECURED AN AVERAGE SALARY
INCREASE OF 5.7% FOR PUBLIC SECTOR EMPLOYEES - SOME 1
PERCENT GREATER THAN THE INFLATION TARGET ESTABLISHED BY THE
BERLUSCONI GOVERNMENT LAST YEAR, GENERALLY USED AS A GUIDE
FOR SALARY INCREASES IN THE NEW ROUND OF LABOR BARGAINING.
PRIVATE EMPLOYERS CRITICIZED THE NEW CONTRACT. THEY CALLED
THE SALARY INCREASES OVERLY GENEROUS AND INDICATED IT WILL
MAKE BARGAINING OVER THE NEW SET OF PRIVATE SECTOR CONTRACTS
MORE DIFFICULT, AS THE CONFEDERATIONS SEEK COMPARABLE SALARY
INCREASES FROM EMPLOYERS SEEMINGLY DETERMINED TO HOLD WAGE
INCREASES TO MORE MODEST LEVELS.


8. THE PUBLIC SECTOR CONTRACT DOES NOT INTRODUCE NEW
FLEXIBLE LABOR ARRANGEMENTS (SUCH AS JOB-SHARING AND STAFF
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PAGE 04 ROME 01360 02 OF 03 311337Z
LEASING) RECENTLY PASSED BY THE PARLIAMENT; THE LABOR
MINISTRY IS STILL WRITING THE REGULATIONS TO IMPLEMENT THOSE
INNOVATIVE PROVISIONS. HOWEVER, IT DOES CONTAIN NEW MEASURE
TO FIGHT SEXUAL ABUSE AND OTHER FORMS OF HARASSMENT IN THE
WORKPLACE.

EMPLOYERS, TRADE UNIONS COOKING UP REMEDIES TO DECLINING
COMPETITIVENESS
-------------- --------------


9. ITALY'S THREE MAJOR TRADE UNION CONFEDERATIONS HAVE
LAUNCHED A SERIES OF DISCUSSIONS WITH CONFINDUSTRIA, THE
PRINCIPAL CONFEDERATION FOR LARGE AND MEDIUM-SIZE COMPANIES,
ON POSSIBLE SOLUTIONS TO ADDRESS THE DECLINING
COMPETITIVENESS OF ITALY'S INDUSTRIAL SECTOR. THE PARTIES
HAVE CREATED FOUR DISCUSSION FORA TO ADDRESS KEY ASPECTS:
RESEARCH, INFRASTRUCTURE, TRAINING AND THE MEZZOGIORNO (THE
SOUTHERN THIRD OF THE ITALIAN PENINSULA, WHICH SUFFERS FROM
CHRONIC HIGH UNEMPLOYMENT AND COMPARATIVELY LOW INVESTMENT).
PARTNERED OFF IN THESE FOR A, LABOR AND MANAGEMENT INTEND TO
DEVELOP JOINT PROPOSALS TO PRESENT TO THE BERLUSCONI
GOVERNMENT: IN SOME CASES, SPECIFIC PROGRAMS AND PROJECTS
FOR FUNDING, IN OTHERS ADJUSTMENTS TO LEGISLATION OR
REGULATION.


10. THE FIRST DIRECT CONTACT BETWEEN CONFINDUSTRIA AND THE

UNCLASSIFIED

UNCLASSIFIED PTQ7721

PAGE 01 ROME 01360 03 OF 03 311337Z
ACTION DRL-01

INFO LOG-00 NP-00 AGRE-00 AID-00 CEA-01 CIAE-00 COME-00
CTME-00 INL-00 DINT-00 DODE-00 ITCE-00 DOTE-00 ANHR-00
SRPP-00 DS-00 EB-00 EXME-00 EUR-00 OIGO-00 E-00
FAAE-00 FBIE-00 UTED-00 VC-00 FRB-00 H-01 TEDE-00
INR-00 IO-00 ITC-01 LAB-01 L-00 VCE-00 AC-01
NSAE-00 NSCE-00 OMB-01 OPIC-01 PA-00 PER-00 PM-00
PRS-00 ACE-00 P-00 SP-00 IRM-00 SSO-00 SS-00
STR-00 TEST-00 USIE-00 PMB-00 DSCC-00 PRM-00 G-00
SAS-00 /008W
-------------- 4D9EBC 311338Z /38
R 311337Z MAR 03
FM AMEMBASSY ROME
TO SECSTATE WASHDC 9034
INFO DEPT OF LABOR WASHDC
DEPT OF TREASURY WASHDC
LABOR COLLECTIVE
EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 03 OF 03 ROME 001360

SIPDIS

DEPT FOR DRL/IL, EUR/WE, EB/OMA, INR/EUC
DOL FOR ILAB/PERLMUTTER, BRUMFIELD, LEVINTOW
TREASURY FOR OASIA HARLOW, CARNES

E.O. 12958: N/A
TAGS: ELAB ECON PGOV PINR ECON PGOV PINR ECON PGOV PINR IT ITELAB ITELAB
SUBJECT: LABOR ANTIPASTI FOR ITALY
UNCLASSIFIED

PAGE 02 ROME 01360 03 OF 03 311337Z

UNION CONFEDERATIONS IN TWO YEARS, THE TALKS WERE SPURRED BY
FIATAUTO'S RECENT DIFFICULTIES AND THE BERLUSCONI
GOVERNMENT'S REACTION TO THE CRISIS (SEE REFS B AND C FOR
MORE DETAILED ANALYSIS OF FIAT'S DIFFICULTIES). BOTH LABOR
AND MANAGEMENT BELIEVE THE GOVERNMENT SHOULD BE DOING MORE
TO ENCOURAGE AND SUPPORT PRIVATE RESEARCH AND INNOVATION AND
TO BUILD ON THOSE AREAS, SUCH AS DESIGN, AT WHICH ITALIAN
INDUSTRY EXCELS. EVEN IF THE TALKS FAIL TO PRODUCE TANGIBLE
SPECIFIC RESULTS, THEY COULD FOSTER A MORE PRODUCTIVE
ATMOSPHERE FOR UPCOMING NEGOTIATIONS OVER PRIVATE SECTOR
WAGES AND BENEFITS AND A VARIETY OF OTHER WORKPLACE ISSUES.

PARLIAMENT APPROVES SWEEPING EDUCATION REFORM
--------------


11. ON MARCH 12, THE SENATE PASSED THE FIRST MAJOR REFORM TO
ITALY'S EDUCATIONAL SYSTEM IN 80 YEARS. THE REFORM PACKAGE
IS INTENDED TO IMPROVE THE OVERALL QUALITY OF PUBLIC
EDUCATION. IN PROVIDING STUDENTS WITH MORE CHOICE AND
OPPORTUNITIES TO DEVISE A MORE PERSONALIZED EDUCATION, THE
PACKAGE SHOULD HELP LOWER THE NATION'S CURRENT DROPOUT RATE
OF 10.5 PERCENT, SUPPORTERS CLAIM. THE REFORMED SYSTEM
SHOULD ALSO PRODUCE A MORE VARIED/SKILL-DIVERSIFIED POOL OF
GRADUATES BETTER PREPARED TO FILL THE REQUIREMENTS OF
EMPLOYERS IN A CHANGING ECONOMY. THE REFORM PACKAGE,
SUPPORTERS ASSERT, IS AN IMPORTANT ELEMENT IN IMPROVING
ITALY'S COMPETITIVENESS WITH FELLOW EU MEMBER-STATES AND
OTHER COMPETITORS.


12. THE REFORM PACKAGE WILL CREATE A DUAL-TRACK SECONDARY
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SYSTEM, ADDING A "PROFESSIONAL/VOCATIONAL TRAINING" TRACK TO
THE CURRENT "CLASSICAL" SYSTEM OF SECONDARY SCHOOLS BUILT
AROUND CORE CURRICULA (SUCH AS CLASSICS, LINGUISTICS,
NATURAL SCIENCES AND SOCIAL SCIENCES). STUDENTS WILL ALSO
GAIN OPPORTUNITIES TO RECEIVE PRACTICAL TRAINING THROUGH
APPRENTICESHIP OR INTERNSHIP-STYLE OPPORTUNITIES IN THE
LABOR MARKET TO COMPLEMENT THEIR TRADITIONAL STUDIES.
FOREIGN LANGUAGE AND COMPUTER SCIENCE INSTRUCTION WILL BEGIN
IN ELEMENTARY SCHOOL; A SECOND FOREIGN LANGUAGE WILL BE
ADDED IN MIDDLE SCHOOL. STUDENTS WILL BE REQUIRED TO ATTEND
SCHOOL OR RELATED PROGRAMS FOR AT LEAST TWELVE YEARS.
FORMAL EDUCATION, PRACTICAL TRAINING PROGRAMS AND LABOR
MARKET NEEDS WILL BE BETTER INTEGRATED, ALLOWING STUDENTS TO
GAIN PRACTICAL EXPOSURE TO POSSIBLE PROFESSIONS AND TO
PERSONALIZE CURRICULUMS. A SIMPLIFIED EVALUATION SYSTEM FOR
STUDENTS AND NEW RECRUITMENT PROCEDURES FOR PROFESSORS ALSO
WILL BE INTRODUCED.


13. AS IS THE CASE WITH MUCH ITALIAN LEGISLATION, MANY OF
THE DETAILS TO ACCOMPLISH THESE BENCHMARKS WILL BE HAMMERED
OUT OVER THE NEXT TWO YEARS VIA IMPLEMENTING REGULATIONS -
PROVIDING BOTH SUPPORTERS AND CRITICS AMPLE OPPORTUNITY TO
CONTINUE THEIR ARGUMENT OVER INDIVIDUAL PROVISIONS. ITALY'S
CURRENT AUSTERITY BUDGET AND THE FISCAL CONSTRAINTS OF THE
EU STABILITY PACT ALSO WILL SLOW IMPLEMENTATION; EDUCATION
MINISTER MORATTI FACES AN UPHILL STRUGGLE TO WRESTLE FROM
THE FINANCE MINISTRY A SUBSTANTIAL PORTION OF THE BUDGET'S
EVER-DWINDLING DISCRETIONARY FUNDS. PRIVATE EMPLOYERS JUDGE
THE REFORM PACKAGE AN IMPORTANT ACHIEVEMENT THAT WILL
IMPROVE THE QUALITY OF WORKFORCE; CRITICS, NOTABLY THE
CENTER-LEFT OPPOSITION, CHARGE IT WILL CREATE/REINFORCE
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SOCIOECONOMIC CLASSES. THE MAJOR TRADE UNION
CONFEDERATIONS ARE SPLIT (AS THEY ARE ON MOST DOMESTIC
ISSUES THESE DAYS): CISL AND UIL HAVE SAID THEY WILL TRY TO
SHAPE THE PACKAGE THROUGH DISCUSSIONS OVER THE IMPLEMENTING
REGULATIONS, WHILE CGIL HAS ANNOUNCED ITS STEADFAST
OPPOSITION AND PLEDGED TO ORGANIZE A STRIKES AND
DEMONSTRATIONS TO OPPOSE IT.

SEMBLER

UNCLASSIFIED

>
2003ROME01360 - Classification: UNCLASSIFIED