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article imageA happy first anniversary for Italy's baby-faced PM

By Angus Mackinnon (AFP)     Feb 15, 2015 in World

In football terms, Matteo Renzi looks more like a scuffling midfielder than a predatory striker.

Politically, Italy's baby-faced prime minister knows exactly where the goal is and how to find it.

A year after seizing power via a leadership coup in the ruling Democratic Party (PD), business leaders and experts credit Renzi, 40, with significant progress on an ambitious agenda of reform aimed at shaking Italy out of decades of political and institutional inertia.

In the process, the energetic former mayor of Florence hopes to revive a moribund economy in the face of what some economists see as a chronic competitiveness problem.

But uncertainty over whether he can get his get his policies over the line represents Renzi's biggest challenge as he prepares to raise a glass of prosecco on February 22, the first anniversary of his swearing-in.

Italy's labour unions and the left of the PD see little to celebrate after a year in which the economy stagnated, unemployment rose and the new premier got the framework of a contested new labour law adopted.

Matteo Renzi (right) with Italy's newly elected president  Sergio Mattarella in the presidentia...
Matteo Renzi (right) with Italy's newly elected president, Sergio Mattarella in the presidential car on February 3, 2015 near Piazza Venezia in Rome
Gabriel Bouys, AFP

The law makes it easier to fire workers with the goal that this will make companies more likely to hire.

Hundreds of thousands took to the streets in sometimes violent protests against the plans.

But Renzi's critique of Italy's labour-market apartheid between long-term employees on cushy contracts and the legions of jobless or precariously employed appeared to strike a chord with many voters.

Helped by a tactical alliance with predecessor Silvio Berlusconi, Renzi was able to face down rebels in his ranks, and his personal popularity survived the bruising debate.

- Business backing -

His approval ratings remain comfortably ahead of his rivals and his networking ability has helped raise Italy's profile within the European Union, where Renzi has been a vocal advocate for more growth-friendly policies.

Matteo Renzi (left) welcomes new Greek Prime Minister Alexis Tsipras to the Italian Prime Minister&a...
Matteo Renzi (left) welcomes new Greek Prime Minister Alexis Tsipras to the Italian Prime Minister's Palazzo Chihi official residence in Rome on February 3, 2015
Andreas Solaro, AFP

It is too early to say if the labour market changes will help drive a recovery this year as the positive effects of the euro's recent slide, lower oil prices and the European Central Bank's reflationary bond-buying programme kick in.

They have, however, helped to get prominent business leaders behind Renzi.

"In 11 months, the Renzi government has achieved more than had been done for years," Fiat-Chrysler boss Sergio Marchionne said this month.

Pier Luigi Loro Piana, the heir to the luxury textile group that bears his family name, says Renzi's principal achievement has been to "stay in the saddle".

"The political system in Italy is extremely difficult to change, even Berlusconi couldn't do it. If Renzi can move us towards the Anglo-Saxon model, things will get better."

That is the goal of a new electoral law that Renzi guided through the Italian Senate with help from Berlusconi.

The law, set to be adopted in the coming months, is designed to ensure election winners have a working parliamentary majority and end the pattern of shaky coalitions that has blighted Italian politics since World War II.

The potential for decision-making gridlock will be further reduced if Renzi can push through proposed constitutional changes which will sweep away the Senate in favour of a second chamber with greatly reduced powers.

Shake-ups of the snail-paced judicial system and Italy's schools are also part of Renzi's longer-term agenda for change.

- Worthy of Machiavelli -

The deal with Berlusconi that eased the first reforms through parliament was widely thought to have left Renzi in his predecessor's debt.

But that idea was debunked this month when the premier ignored the tycoon's objections and imposed his own candidate, Sergio Mattarella, as Italy's new president.

Berlusconi cried betrayal while commentators hailed Renzi's coup as proof he has a ruthless edge worthy of Machiavelli, the renaissance chronicler of Florentine scheming.

A practising Catholic and the son of Christian Democrats, Renzi is often portrayed as being on the right of his centre-left party.

But according to Bologna University economist Paolo Onofri, the progressive elements of his first-year policy mix have been downplayed, perhaps deliberately.

"There have been a lot of initiatives -- tax cuts for the low paid, the 80-euro baby bonus, extension of unemployment benefit rights -- that have helped the poorest in society and reductions in payroll taxes have helped companies," he said.

Onofri, a member of the Prometeia economic research group, also highlighted a little-noticed wealth tax discreetly adopted at the end of 2014 for anyone holding more than one million euros ($1.14 million) in the bank and steps to close tax loopholes enjoyed by banks registered as foundations.

"Renzi is a good communicator so I don't think it is an accident they haven't played up these things too much," Onofri said.

"They don't want to be seen too much as a government of the left."

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