International News

By Steve Scherer

ROME (Reuters) - Italy's new government, already sinking in opinion polls and riven by internal disputes, on Wednesday lays out its plans to address one of the main causes of public anger - soaring unemployment among young people.

But the left-right coalition's room for maneuver even to address this pressing problem is restricted by Europe's second-biggest debt, the longest recession in at least four decades, and a long list of campaign promises.

The coalition between Prime Minister Enrico Letta's center-left Democratic Party (PD) and Silvio Berlusconi's center-right People of Liberty (PDL) was formed only last month but has already run into trouble.

Berlusconi is besieged by court cases, Letta's own party is badly split over whether it should even be in an alliance with the scandal-plagued media magnate, and the two factions bicker openly on a daily basis.

The government's approval rating fell last week to 34 percent from 43 percent just two weeks earlier, according to an SWG poll.

Public disgust with the traditional parties for not turning around an economy chronically stagnant over the past two decades handed the anti-establishment 5-Star Movement a quarter of the February national vote, a third of it from 18- to 24-year-olds.

The 5-Star now is the main opposition bloc, and what little cash Letta had to spend has gone to suspending a property tax to satisfy Berlusconi's demands, and funding subsidies for idled factory workers, a program dear to the left-wing unions.

That is why the government is proposing low-cost policy changes for now, like tweaking hiring rules and seeking more funding for a European Union job-training program.

But Letta has said that youth employment is his government's top priority, knowing that it is one of the few issues that both the sides agree on, and aware that addressing the problem will steal some of the thunder from the 5-Star opposition.

Labor Minister Enrico Giovannini meets unions and employers at 1400 GMT (10 a.m. EDT)on Wednesday to illustrate the plans to turn around youth unemployment, now at almost 40 percent nationally and near 50 percent in the more economically depressed south.

YOUTH VOTE

In the national election three months ago, young people voted overwhelmingly for political change by seating the youngest parliament in post-war history. But the older PD party leaders and the 76-year-old Berlusconi are still pulling the strings behind the scenes.

Though short on political clout, young lawmakers do not hesitate to underscore the plight of their generation and what is at stake.

"It is clear that if we don't act now to create jobs for young people, in 10 years time there won't be enough workers to pay their own parents' pensions, and the country will be dead," Anna Ascani, a 25-year-old PD lawmaker, told Reuters.

Italy has the third-oldest average population in the world, behind only Japan and Germany, and there are only three working-age people for every pensioner, the second lowest proportion globally to Japan, United Nations data show.

More than 60 percent of young Italians expect to be poorer than their father and mother were, and 38 percent live with their parents because they cannot afford their own housing, according to a study by pollster SWG published on Tuesday.

A separate report by the national statistics institute ISTAT said millions of Italians cannot afford to heat their homes properly or eat meat, driving home the magnitude of the economic challenge confronting the Letta government.

(Additional reporting by Francesca Piscioneri; Editing by Barry Moody/Mark Heinrich)