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 APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200080001-6

Since then work stoppages have been endemic, and a grumbling war of attrition between unions and employers has limited output. Labor trouble on such a scale damaged confidence, and investment has dropped. The result has been a low growth rate that made the political and economic situation more unstable and enhanced the polarization of the right and left. The metalworkers settlement in early 1973 was reached after months of negotiation and a loss of about 200 million man-hours—10 times more than strikes have caused in West Germany in the last dozen years. In the meantime, by 1972, nervous Italians had carried abroad nearly $5 billion in lire, rather than investing it in Italy.

Italy now has become the world champion for strikes, to the extent that newspapers try to provide daily schedules showing who is striking where. Thus forewarned, a person may be able to cash a check before the bank employees go on strike, or get a train ticket to Milan if the airlines are going to strike. If the post office is striking he must send an urgent package by other means, and if employees of a government ministry are not answering the phone today, there is no point in dialing. Strikes are supplemented by absenteeism, which has generally averaged about 10% in Italian industry since 1969. Under the Workers' Charter, adopted by the government in 1970, employers are not permitted to check directly on claims of sickness.

Wildcat strikes and production-line sabotage inspired by the radical left have accentuated basic disagreements on strategy and tactics and have frustrated the hopes of many union leaders to unify the labor movement. In order to achieve better control and concerted action, the union leaders had planned to unite the three great labor unions in 1972, but their profound differences made it impossible; instead a loose "umbrella" confederation covering the 7.2 million workers was established.

Fewer people are at work in Italy than there were a decade or two ago, and Italy's labor force has shrunk to the point that now 35% of the population support the rest—the lowest such proportion in all the industrialized countries. This figure would be nearer the normal, however, if it included the 1.5 to 2 million Italians who live and work in other European countries. They contribute modestly to the economy by sending money home to their families; such remittances to Italy by workers and emigrants now average about $1 billion a year.

Since 1969 the economic miracle has been almost forgotten. Higher costs and the squeeze on profits have slowed economic growth, and the real growth in GNP during 1971 was the lowest in more than 20 years. Although the recession bottomed out in 1971, the economy has been slow in regaining momentum, and unemployment was still high in the first half of 1973. Italian labor is no longer so productive or so cheap as it was, and new factories are blossoming in many countries, such as Singapore, South Korea, Spain, and Taiwan, where labor costs are lower. Olivetti now produces all of its portable typewriters in Spain, and its European market for calculators is being rapidly undercut by cheaper Japanese models. Fiat, on the other hand, continues to do well in the European market, providing 20% of the automobiles and 30% of the earthmovers, and Fiat automobiles are being produced in factories around the world, including several in Communist countries.

A good many Italians have seen Italy's future as a puzzle that might be solved through becoming part of the broader future of Europe. They have pressed for economic and political integration within the European Communities (and the more members the better). The economic miracle of Italy did not become full blown until after they joined the Common Market in 1957, and their enlarged European market enabled the leading Italian manufacturers to expand and, in some cases, to overtake their rivals to the north. Since 1969 the chronic labor troubles have made it harder for Italian industry to compete; Italy has become the weakest member of the Common Market, and the need for labor peace has become obvious to all except the radical left minorities in the unions.

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200080001-6