Italy's new government will overhaul Renzi labour reform, minister says

Italy's new anti-establishment government will change the labour reform introduced by the previous administration, Labour and Industry Minister Luigi di Maio said.

The legislation introduced in 2015 eased firing restrictions for large companies, while offering generous, temporary fiscal incentives for firms that hired permanent workers on new, less protected terms.

Italy's government was finally sworn in on Friday, ending months of political turmoil and the threat of a repeat election. But investors remain nervous, since the coalition promises to increase spending, slash taxes and challenge European Union fiscal rules, which would add to Italy's debt pile.

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"People not only don't have any (job) security to get married, they don't even have any (job) security to book their holidays," Di Maio, 5-Star Movement's leader said in a Facebook post. Di Maio was appointed as deputy prime minister and head of the newly merged labour and industry ministry.

Former Prime Minister Matteo Renzi pushed through the so-called Jobs Act in 2015, promising it would crate jobs and end a situation where the vast majority of young people were employed via insecure short-term contracts.

While the formation of a new coalition government in Italy may help to stabilize markets rattled by weeks of uncertainty, this does not signal an end to Italy's economic woes.

A slew of old problems such as stifling bureaucracy and deep-rooted corruption has made it difficult for Italy to pull out of its political and economic crisis.

"We have had a very big decline in investment in the last 10 years so we could not succeed in making reforms in Italy. We have a lot of problems from the labor market and also we have problems with productivity growth," said Umberto Triulzi, an economics professor at Sapienza University in Rome.

Most alarming is Italy's national debt which is nearly 2.7 trillion U.S. dollars.

As a member of the European Union, Brussels has placed strict and unfavorable austerity measures on the country to stop it from defaulting.

Italy's public debt now stands at around 132 percent of gross domestic product (GDP), more than double of the 60-percent limit set by the EU.

"We have to reduce the debt ratio, the bill, which is today 132 percent over the bill, up to 60 percent. So we are obliged in the next 20 years to reduce by 120 percent the debt ratio in the 20 years. So it's very heavy and the austerity doesn't help us to grow, because we cannot invest because we are too much in debt," said Triulzi.

Over the past nine years, Italy's annual economic growth has struggled to reach one percent, while its unemployment rate hovers around 11 percent.