France's Hollande urges euro zone government

TRUE SOCIALIST

Hollande's call for a stronger social Europe came as Spanish Prime Minister Mariano Rajoy in Madrid rejected demands by unions for greater protection for workers, saying he would pursue cuts in education and health spending to reduce the Spain's large structural deficit.

"Europe must be much more competitive and flexible," Rajoy told reporters after the talks with labour groups.

Hollande, whose approval rating has fallen further than any French president in his first year, sought to reassure left-wing voters that he remained true to his Socialist colours.

He expressed full confidence in Prime Minister Jean-Marc Ayrault, played down clashes among his ministers on economic policy while urging the government to speak with a single voice, and said there might be a reshuffle in due course, but not now.

He warned that France's pension system was unsustainable and that a reform due later this year would mean the French having to work longer in future to receive a full pension.

"As long as life expectancy gets longer, there is a principle that is obvious. The longer we live, the longer we need to work," he said.

Hollande's Socialists opposed a 2010 pension reform forced through by his conservative predecessor, Nicolas Sarkozy, that raised the minimum retirement age to 62 from 60. The Socialist leader is hoping to avoid unleashing similar strikes and unrest by having trade unions and employers negotiate a new overhaul.

The president reaffirmed a promise to reverse the rising trend in unemployment by the end of the year, despite scepticism among economists and voters that this can be achieved while the economy remains flat.

On the slump in his own popularity, Hollande was phlegmatic: "I became president at the worst of moments - but I put myself forward just the same ... I knew it was the middle of a crisis."