By Steve Scherer
ROME (Reuters) - President Sergio Mattarella on Sunday urged political parties to make realistic proposals to tackle Italy's problems, especially joblessness, ahead of an election in March.
Although the presidency is largely ceremonial, Mattarella does have the power to pick prime ministers and dissolve parliament, which he did this week to open the way for a March 4 election.
"The duty to make adequate proposals - realistic and concrete ones - is a must given the dimension of the problems our country faces," Mattarella said during a traditional end-year speech broadcast live on national television.
"Yet again I must underscore that jobs remain the primary and most serious social issue, especially for the young," he added in his unusually brief 10-minute address.
Italy's economy, the euro zone's third-biggest, probably grew this year at its fastest rate since 2010, but remains among the most sluggish in Europe. Unemployment remains above 11 percent, while youth joblessness is about 35 percent.
Though Italy has the largest public debt in the euro zone after Greece's, all the main political forces are pledging to raise the budget deficit if they win the election, with policies ranging from the expansive to the outlandish.
Italy was at the heart of the euro zone debt crisis in 2011, and the impending vote is seen the next source of potential instability in the currency bloc.
UNCONVENTIONAL PROPOSALS
The premium that investors demand to hold Italian rather than German 10-year government bonds reached its widest since Oct. 23 on Friday, a day after Mattarella dissolved parliament.
The ruling Democratic Party (PD) is promising up to 50 billion euros (£44.5 billion) in tax cuts, while the centre-right Forza Italia (Go Italy!) wants to bring back the lira for domestic use alongside the euro and introduce a flat income tax.
The anti-establishment 5-Star Movement has floated the idea of holding a referendum on Italy's euro membership if the European Union refuses to renegotiate its stringent fiscal rules.
Opinion polls now suggest no one will win a parliamentary majority, which may force Mattarella to intervene to try to break a political deadlock.
A centre-right alliance built around Silvio Berlusconi's Forza Italia looks set to take the largest number of seats, according to the most recent polls, but is likely to come up short of a majority in both houses.
Polls suggest Forza Italia will get around 16 percent and its partners, the right-wing Northern League and Brothers of Italy, 14 and 5 percent respectively.
Five-Star Movement leads opinion polls with more than 27 percent of the vote, followed by the PD on around 24 percent.