–Adds Comments On Structural Reforms, Educational System

CATANIA, Italy (MNI) – Italy needs structural reforms to bolster
economic growth, since government austerity measures alone will not be
enough to assure a lasting balance in public finances, European Central
Bank Governing Council member Ignazio Visco said Friday.

Whereas the low borrowing rates obtained by joining EMU had allowed
governments to service their huge public debt in the past, recent market
tensions have jeopardized this situation, “fueling [market] players’
doubts about the sustainability of Italy’s sovereign debt,” the governor
of the Bank of Italy said in a speech for delivery here

Italy’s anemic growth over the past two decades can be largely
attributed to the delayed and uncertain response of the productive
system to the challenges posed by technological innovation,
globalization and European integration, Visco explained.

Structural reform must be broad-based and encompass economic
institutions in order to stimulate activity and employment, especially
for women and young people, he said.

What is needed is more competition, better access to risk capital,
especially for innovative firms, labor market reform and a system of
social protection that favors a shift of human resources towards more
productive firms.

“Lack of competition limits productivity and employment in many
sectors, undermines competitiveness and the innovative capacity of the
entire system, delays the renovation of a still fragmented productive
system and prevents talents from emerging,” he said.

To overcome the dualism of the labor market and better adapt wages
to productive conditions, Visco proposed an overhaul of regulations
and social protection and more flexible and decentralized pay
bargaining.

Much of the speech to the Italian association of juvenile and
family court judges focused on the need to upgrade the country’s
education system in order to enhance the human capital available to
firms.

Speaking in Sicily, where the criminal organization Cosa Nostra
remains a key player in business affairs, Visco underscored the link
between delinquency and low levels of education: “The resulting social
and economic costs are enormous.”

–Paris Bureau: 331-4271-5540; ssandelius@marketnews.com

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