Reuters International

Italy's Prime Minister Matteo Renzi gestures during a news conference in Rome, Italy, April 7, 2016. REUTERS/Remo Casilli

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ROME (Reuters) - Italian Prime Minister Matteo Renzi on Thursday won the backing of the country's biggest employers' lobby for a constitutional reform on which the 41-year-old premier has staked his political future.

Renzi's allies in parliament passed a constitutional reform that effectively eliminates the Senate as a legislative body and removes some powers from Italy's regions in a bid to speed up lawmaking and make governments more stable.

By law there must be a referendum on the changes. Renzi has said if he loses the ballot, expected in October, he will stand down, potentially unleashing political chaos and market turbulence in the euro zone's third-largest economy.

Confindustria has not formally decided how to vote, but its leader said it had been calling for this kind of reform for years.

"We are pleased to see this goal is now within reach," Vincenzo Boccia said during his first speech since being voted in as Confindustria's president in March.

Thursday's endorsement followed criticism from Italy's biggest labour union CGIL, which said on Wednesday it was improper to turn a change to the constitution into a litmus test for the entire government.

CGIL said the equal share of powers between Italy's upper and lower house should be changed but the new plan for the Senate would need to include extra checks and balances between the legislature and executive branch of parliament.

The current system was constructed after World War Two with a view to preventing the rise of another strongman like Fascist leader Benito Mussolini. The equal share of powers has been blamed for the fact that none of the 63 governments constituted since then has lasted a full five-year term.

The industry lobby will officially announce its position on the referendum after a meeting on June 23, Boccia said.

Confindustria was once a formidable force in Italian industry, but lost some of its clout when carmaker Fiat renounced its membership in 2010.

(Reporting by Antonella Cinelli and Stefano Bernabei; Writing by Isla Binnie; Editing by Steve Scherer and Tom Heneghan)

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