Italy's €24 billion austerity plan threatens to further erode government popularity and could lead to a national strike by a big union which contends it hurts the weak and spares the rich.
The government last night approved slashing funds to local bodies and freezing salaries for state workers, joining European peers like Spain and Portugal with spending cuts aimed at staving off contagion from the Greek crisis.
In a sign that a public backlash feared by Prime Minister Silvio Berlusconi could be brewing, Italy's largest union joined smaller labour groups and the centre-left opposition in attacking the measures.
"There's no need for big words - I expected more equitable austerity measures. It doesn't seem to me that's the case," Guglielmo Epifani, head of the CGIL union, told La Stampa.
He said the union, which has about five million members, will decide on a national strike after evaluating the package.
Strikes are common in Italy, but a national strike would sharply increase the pressure on Mr Berlusconi, who so far has shrugged off the crisis as a figment of the left's imagination.
Italy's other major unions, CISL and UIL, offered more muted criticism of the plan and called for more cuts to perks enjoyed by politicians to save an "economy in war".
The cuts, amounting to about 1.6 per cent of GDP, are aimed at pushing the deficit below the EU's 3 per cent ceiling. Although Italy kept its budget deficit down to 5.3 per cent of GDP last year - well below the EU average - the budget aims to slash it to 2.7 per cent by 2012.
In a bid to give the appearance that sacrifices will be spread evenly, the measures include pay cuts for ministers, parliamentarians and senior state-sector managers.
The plan also is expected to press regional and local governments to contribute some €13 billion of spending cuts in 2011-2012, almost inevitably affecting schools and hospitals. Busy arteries such as Rome's ring road may become toll roads.
Italy's €1.76 trillion debt, the world's fourth biggest in nominal terms, trails only that of the US, Japan and Germany, and reached 115.8 per cent of GDP last year, the highest ratio in the EU.
Mr Berlusconi - whose popularity has flagged over a corruption scandal - has kept an unusually low profile in recent days, saying almost nothing about the budget cuts and leaving the talking to his top aides.
Italian media have reported he is unhappy with the package drawn up by Economy Minister Giulio Tremonti, fearing the cuts are too severe and will further hit sliding approval ratings.
But the plan drew praise from other quarters, including European Economic and Monetary Affairs Commissioner Olli Rehn, who called it "very significant".
The Moody's ratings agency said the package should reassure markets on Italy's commitment to cutting deficit levels, while S&P said it should put public finances on a more sustainable footing and preserve its current ratings.
Reuters