ITALY'S REFORM TAKE A POUDING ON THE STREETS

WITH THE assassination last month of Professor Marco Biagi, an adviser to the Italian government on labour reform, the bullet has once again taken centre stage in Italy's too-frequently bloodied democracy.

But the bigger threat to the economic reform programme of Prime Minister Silvio Berlusconi's Centre-Right government, if not to the officials who serve in it, comes from the threat of massive street demonstrations organised by powerful Leftwing trade unions.

The murder of Biagi, a moderate intellectual who also advised the Centre-Left government that preceded Berlusconi's administration, appears to be the work of a reborn cell of the ultra-Leftwing Red Brigades, which were active during the terrorist murders of the "years of lead" at the end of the 1970s.

Whether or not this will prove to be an isolated incident like the killing in 1999 of Massimo D'Antona, a labour adviser to the previous government, remains to be seen.The only clue so far is that the police believe that the same gun was used in both attacks.

What is clear, however, is that the opposition to Berlusconi's reforms, which is impotent in Parliament because of his overwhelming victory in last year's elections, is determined to take its arguments to the streets. Last month more

than a million Leftwing activists from all over Italy paraded down Rome's Via Cavour towards the Coliseum for hour after hour, waving their red flags emblazoned with the hammer and sickle.

Meticulously organised by the CGIL, Italy's biggest and most Leftwing union with more than five million members (half of them retirees), the march was billed initially as a protest against Article 18 of Italy's labour law.

This protects workers in companies with more than 15 employees from dismissal without compensation of at least 15 months' wages.

The government's determination to change Article 18 has become a symbol of the battle to free up what economists see as the most rigid labour market in Europe.

Without fundamental structural reform, Italy's longer-term economic prospects look bleak. The national unemployment rate is running at just over 9%. But in the prosperous north, the nation's economic dynamo, an unemployment rate of 4% is already signalling

that in key sectors capacity constraints will emerge quickly as economic recovery takes hold.

The Organisation for Economic Co-operation and Development says in its latest report on Italy that the country is suffering from "declining international competitiven wea leas mun rese ing com emp

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