Italy Indus Group Signs Wage Deal Without Main Union

2nd UPDATE:Italy Indus Group Signs Wage Deal Without Main Union (Adds background details.) ROME -(Dow Jones)- Italy's largest industrial lobby, Confindustria, and most of its unions will forge ahead with the signing of an accord to overhaul the national wage system, but without the country's largest union Cgil, a spokeswoman for Confindustria said. The long-awaited deal, which will be signed in Rome at 1700 GMT, should help boost lagging labor productivity at a time when the economy is mired in a recession. Cgil has more than 5 million members. In January, Prime Minister Silvio Berlusconi's government reached an accord with all Italian unions, except Cgil, tying salaries more closely to productivity at a company level. The accord, which replaces an outdated system in place since 1993, will apply to private and public-sector workers. A spokesman for Cgil said the union has no intention of signing the deal. Italy's government has said it will forge ahead with the changes even without Cgil's approval. Economists say this is the kind of measure that Italy needs and can afford as the country is unable to spend its way out of the recession because of its huge public debt, the largest in Europe. The Bank of Italy said Wednesday public debt rose in February to EUR1.71 trillion, its highest level ever. Tax revenues fell to EUR25.22 billion in February from EUR27.9 billion in the same period a year earlier, a sign Italy's gross domestic product is falling. Bank of Italy's latest figure on 2008 debt-to-GDP is at 105.8%, much higher than the European Union's 60% target. Italy's share of world exports, a key driver of economic growth, has been falling steadily over the past decade due to higher labor costs and lower labor productivity rates compared with those in Germany, the world's biggest exporter. Poor labor productivity is a big part of Italy's problem; Italian workers are the least productive among the 30 developed nations in the Organization for Economic Cooperation and Development. Although the overhaul is unlikely to provide immediate relief to the economy, which is expected to contract over 2% in 2009, it lays the ground for stronger results later on, economists have said. Due to its huge debt, the Italian government's ability to raise spending to boost the economy is limited. Rome is concerned a big fiscal boost would backfire, leading to higher government bond yields that would raise borrowing costs further. Web site: www.confindustria.it -By Sofia Celeste, Dow Jones Newswires; +39 06 697 66923; sofia.celeste@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=ZoEQ9VJtYzxGsJmjLFOE1Q%3D%3D. You can use this link on the day this article is published and the following day.