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Italy's Prime Minister Matteo Renzi (L) speaks to Italy's Minister for Constitutional Reforms and Parliamentary Relations, Maria Elena Boschi during a news conference at Chigi palace in Rome, Italy, September 1, 2014. REUTERS/Max Rossi/File Photo

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ROME (Reuters) - Italy's largest trade union urged its members to vote 'No' in a forthcoming referendum on constitutional reform, dealing a blow to Prime Minister Matteo Renzi, who has staked his political future on the ballot.

Renzi says the reform will increase political stability and, by curbing the powers of parliament's upper house, end decades of revolving-door governments that have made it difficult to revive the country's debt-ridden economy.

The referendum is due before the end of the year and recent polls have put the 'No' camp marginally ahead.

Potentially adding to that lead, the Cgil union said its general assembly "calls for a 'No' vote in the upcoming constitutional referendum", although it respected the right of its members to make up their own minds.

The union has traditionally been close to Renzi's centre-left Democratic Party (PD), but the government has angered it by keeping a cap on state pension payouts and by loosening hiring and firing laws in the private sector.

Many of Cgil's members, who numbered some 5.5 million at the end of 2015, are pensioners.

"It is obvious that discussions on the referendum have gone well beyond institutional questions," said Luigi Bresciani, a Cgil official from northern Italy, who told Corriere della Sera newspaper that he would vote 'Yes' regardless.

Renzi said this week that the referendum would be held between Nov. 15 and Dec. 5.

He repeated a pledge to resign if he lost, but, in an effort to stop the ballot from becoming a vote on his government, he has said that whatever happens, elections will still be held as scheduled in 2018.

This suggests his party will either nominate a new prime minister from within its ranks in the case of a 'No' vote, or support a new government of non-elected technocrats.

Italy's second largest union, Cisl, has said it will not take any position ahead of the referendum, while the third largest union, Uil, is expected to decide on a recommendation in the coming weeks.

(Reporting by Francesca Piscioneri; Writing by Crispian Balmer; editing by John Stonestreet)

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