Italy PM defends labour reforms as jobless rate rises

Italy's Prime Minister Matteo Renzi defended his labour reform programme Friday, playing down gloomy unemployment data and insisting the debt-laden country was on the right path to growth.

The jobless rate rose in June to 12.7 percent, up 0.2 percent on a month earlier, the National Institute of Statistics said -- a figure grasped by opposition parties as proof that Renzi's 'Jobs Act', launched in March, was failing.

The data for youth unemployment was particularly striking, showing it had risen to 44.2 percent in June -- the highest level since 1977.

"With the Jobs Act we have stimulated the job market, we have made a big investment but employment is the last thing to pick up after a period of crisis," the premier told a press conference, insisting the results were "weak but encouraging".

"There is still much to do... but we are headed in the right direction," he said.

While the centre-left leader has made the 'Jobs Act' a cornerstone of his premiership, saying it will boost productivity and growth, it has been slated by the country's powerful trade unions for undermining workers' rights in favour of big businesses.

Renzi insisted that "those who were mistrustful are now beginning to believe", but steered clear of a report by the Svimez Institute which warned the impoverished south of Italy risks being trapped in a permanent cycle of underdevelopment.

"The prime minister believes Italian citizens to be particularly stupid," said MP Stefano Fassina, who broke from Renzi's Democratic Party (PD) earlier this year.

Lawmakers from the anti-establishment Five Star party released a statement asking:  "What is the result four months after the launch of the Jobs Act? Fewer rights without more work in exchange".

"The government has accomplished nothing, the situation for Italians continues to worsen," it said. .

"Renzi's Titanic is headed straight for the iceberg."