Italians reject referendum on wage indexing, back Craxi's effort to cut inflation

Italians have confirmed their support for their Socialist-led coalition government and its efforts to bring inflation under control. In voting Sunday and Monday they defeated a communist-sponsored referendum that would have restored automatic pay hikes which the government reduced last year in an effort to bring inflation under control.

``Popular will has confirmed parliamentary will,'' commented Defense Minister Giovanni Spadolini, who heads the Republican Party.

The vote concerned the prickly issue of indexing wages to the cost of living under a system known as the scala mobile or ``moving staircase.''

By government decree early last year, the automatic increases in workers' salaries were reduced by about one-third. In retaliation the Communist Party (the second largest party in Italy) forced this week's referendum.

With 54.3 percent of the voters rejecting the referendum, the government won a political as well as economic victory. Supporters of the referendum were an incongruous grouping: the neofascist Italian Social Movement as well as the communists and the ultra-left Democratic Proletarian Party.

Observers see the vote as bolstering Socialist Prime Minister Bettino Craxi's government, which has been in power for almost two years, and its efforts to cut inflation. Before voting began Sunday, he pledged to resign if the referendum passed.

Since the reduction of wage increases under the scala mobile was announced in February 1984, inflation has dropped from 12.5 percent to 8.5 percent. In addition Italy has become more attractive to foreign investors.

Nonetheless, the Communist Party, which has been losing ground, has confirmed that it is still a force to be reckoned with. With 46 percent of the voters endorsing the referendum, Communist Party leader Alessandro Natta claimed ``a remarkable affirmation.''

Political observers say the vote confirms Mr. Craxi's statement that the ``vote consolidates the present political balance.'' But they warn that it -- and the May 12 regional elections -- signal that the government has been given greater responsibility to act, not just talk.

``Now the five parties must converge rather than dispute. . . . The period of five-party governments seems destined to last, if possible with greater commitment in renewing the country's economy and public finance,'' writes commentator Alberto Ronchey in the daily Corriere della Sera.

Further battles over the scala mobile seem likely. The Confederation of Italian Industry has announced its intention to withdraw from the wage-indexing agreement entirely. In effect, the confederation said it is in favor of opening negotiations for a new mode of salary scaling.

A spokesman for the Communist-led Confederation of Italian Workers responded, ``We obviously see this as a clear provocation. . . .''