European governments, employers and trade unions agreed on a plan Thursday to fight fast- rising unemployment.

The plan includes proposals to keep people at work through temporary working hour adjustments and improving the efficiency of national employment services, EU policy makers said after meeting with groups.

The European Commission predicts early this week that the unemployment in the 16-nation euro area will rise up to 11.5% next year, the highest level for several decades. For Spain, the Commission says a jobless rate will rise up to more than 20%, the worst hit country by the global crisis.

The European Commission president Jose Manuel Barroso called for the EU member states, employers and unions to help the unemployed and young people to start their own businesses by providing support training and lowering or eliminating taxes on their beginning.

We all know we must succeed on unemployment because there can be no economic recovery on the foundations of social collapse, Barroso said.

Sweden's Prime Minister Fredrik Reinfeldt, one of the few national leaders, said that free trade, open markets and sustainable budget deficits and public debts were essential to boosting the labor market.

“Protectionism is never the solution if we are going to get a long-term recovery in the labor market… We must have good public finances and ensure that we can pay for our health systems, said Mr Reinfeldt.

The EU will also launch innovative approaches by providing training capital and lowering taxes to set up new businesses.