Reforms adopted by the Italian government on Friday include measures to make it easier to strike labor deals at the company or regional level, Labor Minister Maurizio Sacconi said.
A statement from Sacconi said labor market rules agreed in the package grant company-level or regional contracts the capacity to regulate every aspect pertaining to the organization of labor and production.
Freeing up Italy's rigid system of centralized job contracts was a key demand by the European Central Bank, which called for sweeping economic reforms in return for buying Italian bonds on the market to help stem the market crisis of the past weeks.
The reforms also provide legislative backing to a groundbreaking workforce deal struck by auto giant Fiat last year, which has been the subject of a legal challenge by a union which did not sign up to the accord.
Sacconi said the decree adopted by the cabinet on Friday gave legal force to an accord signed in June between employers and Italy's three main unions groups.
Article 1 of the decree moreover recognizes the general legal force of existing collective company agreements, approved and signed before the accord of June 28 provided they are approved by a majority vote of the workers, it said.
That accord made contracts signed at the company level binding as long as they won the backing of a majority of labor groups or workers.
However it was not retroactive and left ambiguity over the status of labor deals introduced at three Fiat plants in Italy to reduce absenteeism and boost productivity.
(Writing by James Mackenzie; Editing by Andrew Hay)