Prime Minister Silvio Berlusconi wants to hike Italy's retirement age by five years, a move which angered unions and government members yesterday and will likely make for a stormy return after the summer break.
"In Italy people retire on average at 57. It means unsustainable costs and an annoying loss of talent, which could end up sinking us," Mr Berlusconi told newspaper Libero on Sunday.
"We need to raise the retirement age by five years," the billionaire businessman-turned-politician added.
The European Union and the International Monetary Fund have repeatedly pressed Italy to reform its creaking pensions system which swallows about 15 per cent of GDP a year and weighs heavily on the budget deficit.
Italy is hoping to cut its deficit to 1.8 per cent of GDP in 2004 against current projections for a 3.1 per cent shortfall but to do so the government must come up with €16 billion of spending cuts and new income.
The pensions system is already technically bankrupt and a rapidly ageing population will only aggravate the situation.
But as in France and Germany, there is stiff opposition to making Italians work longer, especially from the Northern League - the coalition partner which toppled Berlusconi's first government in 1994 over the issue of pension reform.
"We should not force workers to stay on longer but instead persuade them to do so with a system of incentives," Labour Minister Roberto Maroni, a Northern League member, told La Repubblica newspaper yesterday.
Berlusconi, himself, acknowledged the hurdles ahead. "I have to convince two parties that change is necessary - the Northern League and the (conservative) National Alliance," he said, "On September 1, I will put forward strong reasons."
To make his idea more palatable, the prime minister plans to raise the retirement age in two stages, to 60 years by 2010 and then to 62 after that.
But even if Berlusconi manages to persuade his cabinet, he still has a fight on his hands with the unions, keen to defend their ageing membership and already warning of a "hot autumn."
"If they tear apart our pensions system, we'll fight them," Savino Pezzotta, head of second-biggest union CISL, said.
September will be a tricky month for the government on the economic front.
Italy, which accounts for 18 per cent of the euro zone economy, tipped into recession in the second quarter and the Treasury's 2003 growth target of 0.8 per cent looks under threat as employers predict limp industrial production and consumer demand stays weak.
The most recent inflation data showed prices unexpectedly accelerating in August to 2.8 per cent year-on-year, prompting outrage from consumer groups and unions.
And to cap it all, the government must propose its 2004 budget to parliament by end-September, juggling ministerial demands with pressure to cut its deficit.