Fiat, Italy's biggest business, said on Sept. 3 that it was pulling out of Italy's largest employer's group, fed up with the country's inflexible labor market.
Fiat and Fiat Industrial, which together employ 82,000 people in Italy and 190,000 people around the world, will leave Confindustria at the end of the year, Fiat boss Sergio Marchionne informed group head Emma Marcegaglia in an open letter published on Sept. 3.
"Fiat, which is engaged in the creation of a major international group with 181 plants in 30 countries (in an alliance with Chrysler), cannot afford to operate in Italy in an environment of uncertainty that is so incongruous with the conditions that exist elsewhere in the industrialized world," Marchionne said in the letter.
In response, Confindustria said it "took note" of the move but disagreed with its reasoning.
In June, Fiat agreed to an industry-wide collective agreement negotiated by Confindustria that allowed the automaker major concessions in terms of labor flexibility.
In the letter, Marchionne acknowledged that "this new framework would have enabled all Italian businesses to compete internationally under conditions that are less disadvantageous in comparison with those of our competitors."
However, he added that due to threats to not apply the agreement, Fiat no longer believed the deal would be implemented.
"This decision is without precedent," Labor Law professor at Bocconi University in Milan Maurizio Del Conte said.
Fiat is the backbone of big business in Italy, he said.
Copyright Agence France-Presse, 2011