Bank of Italy chief backs minimum wage to tackle inequality

By Giselda Vagnoni and Giuseppe Fonte

ROME (Reuters) - The head of Italy's central bank on Wednesday backed the introduction of a minimum wage to address social inequalities, in comments that contrast with the position of Rome's right- wing administration on the subject.

In a speech, Bank of Italy Governor Ignazio Visco also urged the government not to jeopardise the tight schedule agreed with European Union authorities to use 192 billion euros ($211 billion) of post-pandemic recovery funds."There is no time to lose," Visco said, adding that improvements to plans could still be negotiated.

"Constant liaising with the (European) Commission will be absolutely necessary, as well as useful and constructive," he told the central bank's annual meeting.

Visco, who steps down this year, also spoke of the role that well-managed migration could play in helping to offset the impact of Italy's low birth rate on the economy over the next two decades.

SHORT-TERM CONTRACTS

Visco, 73, referenced the problems of the job market in Italy, where employment levels have been propped up by low-pay short-term contracts.

"Too many, not just the young, do not have official jobs or, if they do, are not offered adequate contractual conditions, as in the other major countries," Visco said.

He noted that a fifth of young workers were still on temporary contracts even after being in a job for five years.

"Introducing a well-designed minimum wage system could be the response to non-trivial demands for social justice."

Prime Minister Giorgia Meloni at the weekend said such a measure was only good in theory and could backfire in practice.

In Italy gross domestic product per hour worked rose only by an annual 0.3% in the past 25 years, less than one third of the average for the other euro area countries.

Equally, hourly wages recorded in real terms one of the weakest growth rates in Europe.

GROWING OLD

Visco warned that Italy's ageing population will be unable to sustain economic growth in the next two decades even in the best case scenario where participation rates of women and the young improve from current low levels.

"The effects of the decrease in the population in the central age groups may be mitigated in the medium term, besides by an extension of the working age, only by an increase in net migration," he said, citing the need for training and integration programmes.

Successive Italian governments have been accused of failing to harness the skills of migrants and integrate them into the workforce.

Meloni, who has drafted tougher asylum rules since taking office, has also said she will increase channels for legal migration.

($1 = 0.9084 euros)

(Reporting by Valentina Za and Stefano Bernabei; Editing by Keith Weir)