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government may consider strengthened penalties for copyright infringement.

8.

Worker Rights

a. The Right of Association

Workers have the right to associate freely and to

strike. The right to join a union is guaranteed by law, as is the right to refrain from joining. The Industrial Relations Act of 1990 introduced some limitations on picketing but generally renewed legal guarantees of immunity to union members and officials for industrial actions with regard to terms or conditions of employment.

About 58 percent of workers in the private and public sectors are members of unions. Police and military personnel are prohibited from joining unions or striking, but they may form associations to represent them in matters of pay, working conditions, and general welfare. The right to strike is freely exercised in both the public and private sectors.

b. The Right to Organize and Bargain Collectively Labor unions have full freedom to organize and to engage in free collective bargaining. Legislation prohibits antiunion discrimination. Most terms and conditions of employment in Ireland are determined through collective bargaining, which took place in 1991 in the context of a national economic pact (Program for Economic and Social Progress or PESP) negotiated by representatives of unions, employers, farmers and the government. The PESP included an agreement between the Irish Congress of Trade Unions (ICTU) and the Federation of Irish Employers establishing standard pay increases for the three year period of the PESP. In addition, the agreement provides for a one-time wage increase of up to 3 percent to be negotiated at local level during the second year of the PESP.

The Industrial Relations Act of 1990 established the Labor Relations Commission which provides advice and conciliation services in industrial disputes.

C.

Prohibition of Forced or Compulsory Labor

Forced or compulsory labor is prohibited by law and does not exist in Ireland.

d. Minimum Age of Employment of Children

The minimum age for employment is 14 years with the written permission of the parents. Irish laws limit the hours of employment for 15-year-olds to 8 hours per day and 40 hours per week. Those from 16 to 17 years of age may work up to 9 hours per day and 40 hours per week. These provisions are effectively enforced by the Department of Labor.

e.

Acceptable Conditions of Work

There is no general minimum wage legislation.

However,

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some workers are covered by minimum wage laws applicable to specific industrial sectors, mainly those that tend to pay lower than average wages. Working hours in the industrial sector are limited to 9 hours per day and 48 hours per week. Overtime is limited to 2 hours per day, 12 hours per week, and 240 hours in a year. As part of the national economic pact adopted in 1987, the standard work week is being gradually reduced to 39 hours. The Labor Department is responsible for enforcing four basic laws dealing with occupational safety that provide adequate and comprehensive coverage.

f. Rights in Sectors with U.S. Investment

Worker rights described above are applicable in all sectors of the economy, including those with significant U.S. investment.

(D)-Suppressed to avoid disclosing data of individual companies

Source: U.S. Department of Commerce, Survey of Current Business August 1991, Vol. 71, No. 8, Table 11.3

1/ 1991 data are estimates by Italian Government or U.S. Embassy except where data are followed by a month thereby indicating actual data through that period.

2/ "Services not for sale" is defined as services provided by the Government which have no comparable market price. This figure is an Italian Government estimate of "market value" for these services based on "production cost".

3/ This figure does not include foreign purchases of treasury securities issued domestically.

1. General Policy Framework

The Italian economy is one of the world's largest, having undergone a dramatic transformation into an industrial power in the post-war period. Since 1982, the services sector has led economic growth while the industrial sector retooled. Industrial output returned to 1980 levels in 1987, and expanded through 1990, but has turned negative in 1991 as a consequence of the general economic downturn. A member of the Group of Seven (G-7), General Agreement on Tariffs and Trade (GATT), the International Monetary Fund (IMF) and the European Community (EC), Italy maintains a relatively open economy.

The state plays an active role in the economy, not only in the making of macroeconomic policy and rules, but also through control of industrial parastatals and major financial institutions. Nonetheless, the Italian private sector is large and dynamic. Italy has a number of major population centers, and none is predominant. The northern half of the country is more developed and enjoys higher per capita income than the southern half. The divergence in wealth is also reflected in higher unemployment in the south, which constitutes one of Italy's major economic and social problems.

Italy's large and growing public debt constitutes its most pressing economic problem. The stock of this debt exceeded the value of the gross domestic product (GDP) in 1990. The budget deficit was 10.9 percent of GDP in 1990. Despite gains in revenues associated with economic growth and a gradual widening of the tax base, increases in spending in such areas as pensions, health care and public sector salaries as well as for interest have frustrated plans to reduce the deficit and slow the rate of increase of the public debt. Interest payments are becoming an increasingly larger portion of the annual deficit. The government intends to cut the budget deficit/GDP ratio by almost two percentage points from 1991 to 1992 through a combination of increased tax receipts and spending controls.

The overall monetary policy objective is to hold the increase in M-2 (currency plus all bank deposits) and the increase in credit to the non-state sector to the increase in the forecast rate of increase of nominal GDP. This forecast usually assumes a lower-than-actual rate of inflation. Credit to the state sector is considered an exogenous variable. Within this policy framework, the Bank of Italy moved away from

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direct monetary controls in favor of indirect instruments. This is seen as essential in light of the integration of European capital markets. The principal monetary policy tool of the Bank of Italy is open market operations exercised through repurchase agreements with the banks. The central bank discount window is seldom opened. Italy's commitment to exchange rate stability within the European Monetary System complicates the management of monetary policy.

2. Exchange Rate Policies

Italy is a member of the European Monetary System (EMS) as well as its exchange rate mechanism. As such, it is committed to maintaining a flexible parity in relation to the currencies of its EMS partners. In January 1990, Italy moved the lira into the narrow band of the EMS, meaning that the lira can fluctuate no more than 2.25 percent up or down from its central rate vis-a-vis other participating currencies. In May 1990, Italy eliminated its remaining foreign exchange controls in order to align its policies with the EC's directive on liberalization of short-term capital movements. Italian residents are now completely free to engage in all manner of foreign financial transactions, so that the Italian economy is now participating in the international integration underway in financial markets.

3. Structural Policies

Structural rigidities have hindered Italy's economic

growth. Rigid hiring and firing rules, downward wage stiffness and high unemployment benefits for redundant industrial workers have created a resource-distorting labor market and have had a negative impact on job creation. Inefficiencies in the delivery of public services also serve as a hindrance to growth and add to the cost of doing business in Italy. A third major area of structural rigidity is financial markets, which traditionally have been heavily regulated and slow to respond to market needs. The Italian stock market is currently depressed with low prices and modest volume of transactions. This has discouraged many businesses from raising new capital. Government financial support for maintaining existing economic activity, often through state ownership, also limits flexibility in the economy. The above, and other structural problems, have prevented stronger Italian economic growth. Much of the progress in eliminating structural barriers to higher growth has resulted from movement toward a unified European market. The elimination of foreign exchange controls is one example. Recent and proposed legislation to reform the financial system is another.

Government procurement and pricing practices are not completely guided by free market principles. Government procurement, at least in some areas, is heavily directed toward Italy-based suppliers, e.g., heavy electrical equipment, telecommunications and military hardware. Procurement

procedures are not fully transparent. Taxes and customs duties do not present serious obstacles to U.S. exports (except for agricultural products), other than the usual level of bureaucratic red tape which marks all transactions in Italy.