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Obama's Dangerous Italian Labor Rhetoric

President Obama spoke in Detroit on Monday

President Obama condemned yesterday Michigan’s forthcoming transition to a right-to-work state. He claimed, “what we shouldn't be doing is trying to take away your rights to bargain for better wages and working conditions.” Whether he realized it or not, he echoed the same mentality of Susanna Camusso, the secretary-general of Italy’s leftmost labor union. She maintains that any effort to liberalize Italy’s rigid labor markets is a direct infringement upon worker rights.

This rhetoric is dangerous because it energizes workers to defend policies and laws on the basis of emotion. And emotionally charged closed minds are not concerned with policy effectiveness. Arguments for reform, no matter how persuasive, inevitably fall on deaf ears.

In Italy, where firing an employee for poor performance is illegal, rigid labor laws keep Italians unemployed and firms from expanding. I explain further the consequences of Italy’s burdensome labor regulations in the City AM.

Entrepreneurs are extremely hesitant to hire new help and expand their businesses because they don’t want to take the risk of hiring a worker for life. Italy has the smallest proportion of employment in medium-sized firms within the entire EU. It also has the highest proportion in micro-firms, those with fewer than 10 employees.

As I point out, strict labor rules have serious consequences for Italy’s youth.

The law shields older workers, who already have regular contracts, from the competition of new job seekers: the young. Because they are shut out from regular employment, 17 per cent of employed Italians under 35, more than any other age group, work on short-term contracts exempt from protection. The rest not on protected contracts remain unemployed. Italy’s youth unemployment averaged 5.8 percent above the EU average from 2001 to 2010.

In a perverse twist of irony, Italians -- especially the young -- vigorously defend these institutions. What were once laws have now become rights ingrained within Italian culture -- and the rhetoric of Italian trade unions is largely to blame. Any attempts at needed reform are quickly met with union resistance, decrying labor reform as an assault on “human rights.” For decades, Italian politicians have conceded to union demands instead of rebuffing them -- allowing unions to become more and more influential. And now politicians can’t touch the “sacred cow” labor laws of the unions without tearing at the fabric of Italian society.

President Obama should heed the warning of Italy before U.S. labor laws become untouchable rights in the minds of workers. Regardless of his opinion on right-to-work, he shouldn’t close off all avenues for future reform by asserting that the present law is a right. That’s what Italy did. And now it’s paying the price.