Rome, May 14 - Record levels of unemployment in Italy can only be stemmed by boosting production levels and cannot be confronted through fiscal, welfare or pension policies alone, Labour Minister Enrico Giovannini told the Senate's labour committee on Tuesday. Giovannini however said his government would pass "limited and punctual" changes to a labour reform approved under the previous technocrat government of premier Mario Monti to encourage new hires in the recession-hit country. He said the reform drafted by his predecessor Elsa Fornero "is finally producing a series of wished-for effects" by boosting the number of regular, short-term contracts, compared to freelance contracts that give workers few rights and no job security, which are shrinking. Premier Enrico Letta said on Monday that one of four issues topping his left-right government's agenda in its first 100 days in office was creating jobs for young people. Youth employment in Italy reached 38.4% in March, 3.2% higher than the same month in 2012, according to national statistics institute Istat. Overall, according to forecasts released earlier this month by Istat, unemployment will rise to 11.9% this year, up 1.2% in 2012, and climb further still in 2014 to reach 12.3. Giovannini said Tuesday that his government plans to change pension rules, making them more "flexible" to encourage early retirement and "penalize" those who choose not to free new jobs for youths. He also cited planned cuts to the bureaucratic expenses of labor and welfare policies which cost companies five billion euros a year by simplifying procedures and cutting red tape. The labour minister also spoke about the so-called 'esodati', workers who were left without a job or pension as a result of a change in retirement laws passed by the previous Monti government, saying the Letta cabinet was drawing 2a conceptual map" to intervene in different cases which were "extremely varied".