TRENTO, Italy (Reuters) - Italy's Prime Minister Enrico Letta said on Saturday his government aims to reduce youth unemployment to below 30 percent in the next few years with a mixture of fiscal breaks and different contracts for young employees.
Italy's overall jobless rate and youth unemployment edged up in April to the highest levels on record, data showed on Friday, with the youth jobless rate at 40.5 percent. Reducing unemployment in the midst of Italy's longest recession since World War Two is likely to be no easy task.
"Our goal is to bring the youth unemployment below 30 percent," Letta said speaking in the northern city of Trento.
Letta, who came to power in April after two months of political deadlock, has made tackling unemployment a priority and pushed for it to be a central theme at a European Union Council meeting at end-June.
"Middle-aged people in Italy are currently saving money to build a safety net for their children as they fear they will not find any job, this is freezing consumption and investment," he said in an appearance at the city's annual "Economic Festival".
"We will focus on reducing taxation for those getting their first job and cutting taxes on labor in general," he said, adding the government is also studying how to change laws that limit the use of temporary employees and regulate apprentices.
He said the government was pondering a "generational handoff plan" under which older employees would reduce their work hours while mentoring younger people entering the rigid job market.
Employers would pay younger staff less, while older workers would get full social security contributions funded by the government.
The number of people aged between 15-29 years that are not in education, employment or training in Italy rose by 21 percent from 2008 to 2012, to 23.9 percent.
Letta pledged his coalition government will draft a national plan against unemployment before the EU summit in order to foster open discussion among EU leaders.
"The June summit should launch a strong message to European citizens about policymakers' commitment to tackle youth unemployment," Letta said. "If we talk only about the banking union citizens will revolt against us," he said.
Letta said he does not want to renegotiate the so-called 'Fiscal Compact', which encompasses the stricter fiscal rules drafted by the euro zone countries as a reaction to the sovereign debt crisis.
Europe needed institutional reform, Letta said, suggesting the direct election of the president of the European Commission, and a European finance minister and foreign minister and an European army.
(Reporting by Francesca Landini; Editing by Jon Hemming)