Fiat not to renew collective labor contracts in Italy in 2012 image

Fiat Auto SpA sent a letter on Monday to its unions saying it would scrap all labor contracts at factories in Italy after December 31, a person close to the company was quoted as saying by Reuters.

The decision comes after the Italian automaker introduced more flexible labor contracts at three of its five facilities in the country, in an attempt to increase productivity and reduce absenteism.

Earlier this year, Fiat decided to pull out of Italy’s Confindustria employers group after January 1 2012, as it considered the organization to have had an important role in negociating collective labor deals, which allegedly put Fiat at a competitive disadvantage on the international stage. Fiat’s plants in Italy have all been losing money in recent years.

Fiat’s decision has outraged the unions, with the country’s largest trade union CGIL calling the move “destabilizing” and accusing Fiat of trying to impose its own tailor-made labor rules on its Italian workers and breaking national labor deals.

Metalworker’s union FIM-CISL also said in statement that it wanted to quickly start negociations with Fiat and Fiat Industrial SpA on a contract that would cover workers in both companies. A Fiat spokesman declined to comment.