IMF chief hails Renzi's Jobs Act

(ANSA) - Rome, December 9 - Italy's Jobs Act is an important measure that will help to create a better, more fair labour market, Christine Lagarde, managing director of the International Monetary Fund, said Tuesday.
    But the most important measures Italy needs are those that will stimulate economic growth which is essential for job creation, she added in remarks at Milan's Bocconi University.
    Largarde added that "the changes (in the Jobs Act) will make the market work better for workers and businesses". Lagarde's comments came as European economy leaders continued to debate the importance of maintaining fiscal discipline at a time when so many economies in the region are working to expand their economies and create jobs.
    In Brussels, Italy's Economy Minister Pier Carlo Padoan said that Italy will not require any "corrective" budget measures, but admitted some EU members have raised questions about the effectiveness of some of Italy's reforms. Italy's 2015 budget has received tentative approvals from the European Commission, but their final decision has been postponed until March 2015 to see how effective reforms - including Premier Matteo Renzi's Jobs Act - will actually be.
    The European Commission recently warned Renzi's executive that its 2015 budget bill, which includes 18 billion euros in tax cuts in a bid to boost the economy, was at risk of breaching the Stability and Growth Pact's rules on bringing down a national debt of more than two trillion euros. German Chancellor Angela Merkel called on all European countries to all respect budget rules, or risk raising doubts about the stability of the region.
    Merkel was speaking to her political party's congress in Berlin on Tuesday.
    "If in the end, we do not respect (rules) we decided on...it will provoke doubts and this will be negative for Europe," said Merkel. "This is the reason why we want the rules respected".
    Padoan said Tuesday that he also agreed that breaching the 3% limit was not the way to encourage growth.
    Doubts were raised about Italy last Friday when ratings agency Standard and Poor's cut its assessment of Italy's long-term sovereign debt to a BBB-, just one notch above junk bond status.
    It cited concerns about the country's economic outlook as Italy's fights to pull out of its third recession since 2008.
    The Jobs Act is a major and controversial piece of legislation put forward by Renzi to try to fight rising unemployment in Italy that has hit more than 13%.
    But unions and some members of Renzi's own Democratic Party (PD) say the act undermines important job protections.
    Renzi has argued in response that changes are needed to encourage businesses to hire more and create positions for young workers, whose jobless rate is more than 40%. Economic growth is essential for creating jobs for youth in Italy, said Lagarde.
    "When growth is low, youth unemployment is high," she said.
    "Therefore, the resumption of growth is a priority".
    Lagarde calculated that a 1% increase in gross domestic product could reduce the youth jobless rate - now above 40% - by 0.6% and mean about 10,000 jobs.