Rome

Govt move to ease youth unemployment clears Senate

Legislation, including postponement of VAT rise, passes to House

Govt move to ease youth unemployment clears Senate

(By Paul Virgo) Rome, July 31 - The Senate on Wednesday approved a government decree containing measures aimed at combatting rampant youth unemployment in Italy. Premier Enrico Letta's executive hopes the package of tax breaks to encourage firms to take on young people will create 200,000 new jobs. The Senate approved the decree with 203 votes in favour, 35 against and 32 abstentions, and the legislation now moves to the Lower House. The measures are aimed at the under-30s worse equipped to face up to the effects of the recession, such as those without a high-school diploma, those living alone and those who have another person depending on them. The package introduces tax cuts of up to 650 euros a month per worker for a maximum period of 18 months for new hires and 12 months for employees whose temporary or freelance contracts become permanent. Italy's jobless rate is over 12% and around four in 10 young people aged 15-24 are out of work. The decree also includes the postponement of a scheduled 1% rise in the top band of value added tax (VAT) until October. The government is trying to find the money to be able to avoid the increase that would take top band of VAT from 21% to 22%. The Senate on Wednesday also approved an amendment to the decree that allocates an additional 20 to 25 billion euros to pay overdue bills owed by the public sector to private businesses. The sum is to be made available after January 1, 2014, and is in addition to the 40 billion euros already allocated to settle languishing supplier invoices. The Bank of Italy reckons the Italian public administration owes an estimated total of 90 billion euros to private suppliers. Eligible private businesses will be granted promissory notes guaranteed by the State and redeemable from a fund at the State's savings and finance arm, the Cassa dei Depositi e Prestiti (CDP). The government hopes paying its overdue bills will give a much-needed boost to the country's recession-hit businesses, and is a policy originally pushed by technocrat ex-premier Mario Monti to encourage economic growth. In April, a decree authorising the release of 40 billion euros over 12 months for the repayment of public-administration debt to the private sector came into force - one of the very last moves taken by Monti prior to stepping down for the current left-right government led by Letta.

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