FRANKFURT, Germany — European Central Bank (ECB) President Mario Draghi is urging indebted governments to move beyond spending cuts and tax hikes and introduce reforms that would boost growth and reduce the "tragedy" of unemployment.
Draghi praised the progress made by the 17 European Union (EU) countries that use the euro in cutting their average government deficit to 3.5 percent of economic output overall last year. That's down from 4.2 percent the year before.
The reduction was done through spending cuts and more taxes. But these austerity methods have had the knock-on effect of hitting growth and sending the jobless rate to 11.9 percent, highest since the euro was launched in 1999.
Draghi went out of his way to urge steps for growth, by shaking up hiring rules and regulations affecting the products companies make. The goal is to encourage growth and new hires by companies in countries that have left large numbers of 20-somethings on the sidelines of their stagnant economies.
He said it was "of particular importance" to tackle youth joblessness. Unemployment is "a tragedy, and youth unemployment is an even bigger tragedy," Draghi added.
In Greece, the unemployment rate for the under-25s is 59 percent while in Spain it is 55 percent.
The ECB president said that austerity must be followed up with a "comprehensive structural reform agenda to improve the outlook for job creation, economic growth and debt sustainability."
Draghi spoke at a news conference Thursday after the bank left its key rate unchanged at a record low of 0.75 percent, even though the eurozone's economy is in recession. The ECB lowered its forecast for this year, saying the economy would shrink 0.5 percent instead of the 0.3 percent shrinkage projected in December.
Draghi's comments come as eurozone leaders appear to be reconsidering harsh austerity as a way of combating the crisis.
While governments are still under pressure to cut deficits, eurozone finance ministers meeting earlier this week indicated they were now willing to give countries more time to close deficits, lessening the impact of cuts on growth.
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