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Homedavos world economic forum 2014Recovery talk ignores jobs crisis: Davos delegates

Recovery talk ignores jobs crisis: Davos delegates

Business leaders gathering in Davos seem confident that the global recovery is under way but are concerned global leaders are taking their eyes off the ball when it comes to unemployment.

Guy Ryder, the director general of the International Labour Organization, told CNBC at the World Economic Forum that the "gorilla in the Davos living room" was jobs — or the increasing lack thereof on a global level.

"We're seeing a particular focus on young people who are particularly worried about unemployment, we're seeing businesses saying they want to do their part but it's a public policy issue as well," he said on Wednesday.

"One of the big things is uncertainty," he said, adding that until there was more belief in the global recovery, the investment in people power would lag. We point to business and policy uncertainty, people are still unsure as to who has their hands on the steering wheel…People have got to start believing in the real economy and I don't think we have that belief yet."

One boost to that belief in a global recovery came from the International Monetary Fund (IMF) this week when it upgraded its upgraded its global growth forecast, predicting 3.7 percent growth in 2014.

But looking at the continuing dirge of global unemployment data, economic growth is cold comfort for the 202 million people out of work worldwide, according to the ILO's latest figures, and growth does not necessarily mean job opportunities.

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In the euro zone, for example, unemployment remains at a record high of 12.1 percent according to latest data, despite a slow recovery being seen across the 18-nation bloc largely beset with financial crises since 2008.

This week, the ILO warned that global unemployment prospects were bleak until 2018, forecasting in its 2014 Global Employment Trends report that 215 million people would be jobless by 2018.

If growing unemployment was not enough, a decline in labor market participation was also on the rise, the ILO said, a warning borne out by the latest U.S. jobs data from December which showed that the labor force participation rate tumbled to 62.8 percent, its worst level since January 1978.

Furthermore, over the last year a debate has raged in the U.S. over rises to the minimum wage. Thousands of low-paid workers striking in hundreds of cities across the country, demanding a minimum wage of up to $15 per hour to replace the current $7.25 minimum wage, showing that an increasing amount of those even in jobs are unhappy with their lot.

(Read more: US jobs numbers plucked from 'thin air': Gartman)

On Wednesday, another high profile participant at the annual WEF event told CNBC that although there was widespread optimism in the global economic recovery, unemployment — particularly among the young — was a major issue.

"The most important thing is jobs, jobs, jobs and that part of the recovery is not yet obvious," Angel Gurria, secretary general of the Organisation for Economic Co-operation and Development (OECD), told CNBC.

(Read more: Legacy of financial crisis is 'very heavy': OECD's Gurria)

In addition, Dr Jacob Frenkel, former Israeli central bank governor and current chairman of JPMorgan Chase International, said that unemployment and lack of participation in the labor market were major structural challenges facing world leaders.

"In 2010, both the U.S. and Europe had unemployment of about 10 percent. Since then unemployment in Europe went up to 12 percent plus and in the U.S. it went down to 6.7 percent – but is it time to celebrate in the U.S.?"

"It's good news but a very large but a very large proportion of this improvement came from people who left the labor force- labor force participation has declined significantly and therefore the effort to draw them back into the labor force is a structural issue."

– By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt.


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