Italian premier Mario Monti and French leader Francois Hollande on Tuesday said Europe must urgently restore economic growth and create jobs as part of a wider plan to safeguard the 17-country euro currency union.
Monti emphasized Italy's reforms to make the labor market more flexible as steps in the right direction, and called on companies and unions to cooperate to reduce unemployment, which is at a record high in the 17-country eurozone.
`'If the pension reforms realized by this government had been done years ago, this would have given breathing room to new generations," Monti said.
Unemployment is a particularly big problem among young people in Europe. Some economists have warned that leaders must act to avoid losing an entire generation to joblessness.
Hollande said he has asked his government to `'act quickly" to help stem unemployment, which has been growing for 14 straight months and has reached 3 million. To this end, next year's budget will put a hold on public spending and focus on deficit reduction.
The leaders also said they would work to ensure that commitments taken at the last European summit would be acted on. Leaders agreed in June to use the continent's bailout fund to funnel money directly to struggling banks, and to create a tighter union in the longer term.
Hollande said leaders must aim at deepening the banking, economic and monetary union by the end of the year.
Having a tighter union should help financially weaker states, such as Spain, which investors fear will be overwhelmed by the cost of rescuing its ailing banks. A banking union would take over those costs and spread them across the bloc.
Over the past few months, Monti and Hollande have also been leading a pro-growth lobby within the eurozone. Pro-austerity Germany has been coming under increasing pressure to allow countries more leeway to boost economic growth, the lack of which is undermining confidence in the continent's recovery.
The meeting comes as the European Central Bank is expected on Thursday to come up with measures to buy government bonds from countries with high borrowing rates, like Italy. That should bring down those rates, easing the financial strain on the governments.
Hollande announced he and Monti will meet again in Lyon, France in early December. Among the items on the agenda will be the high-speed railway project connecting Lyon and Turin, part of a wider Lisbon, Portugal-Kiev, Ukraine line, that has been blocked in northern Italy.
Tuesday's bilateral meeting was the third since Hollande took office just over three months ago.