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Inequality Threatens 'Global Society': WEF Founder

Inequality risks destabilizing "global society", Klaus Schwab, the German economist who founded and chairs the World Economic Forum, told CNBC on Tuesday.

Speaking in the Swiss alpine village of Davos, at the start of the Forum's annual get-together, Schwab said:

"We have too large a disparity in the world; we need more inclusiveness… If we continue to have uninclusive growth and we continue with the unemployment situation, particularly youth unemployment, our global society is not sustainable."

The World Economic Forum has itself come under criticism as a rich man's "talking shop" and for the high cost of attendance.

(Read More: Davos: Responsible Capitalism or Snow Polo for the Rich?)

But in response to the critics, Schwab said: "I think we should replace the word 'talking shop' with a 'place for dialogue'… A democracy without dialogue is not possible."

Fabrice Cofrini | AFP | Getty Images

Earlier this month, a study by the World Economic Forum rated severe income inequality as the biggest risk facing the world, for the second year running.

In light of the study, Branko Milanovic, the lead economist at the World Bank's research group, warned that severe income inequality could fuel mass migration and popular uprisings.

(Read More: Is Income Inequality the Biggest Global Risk?)

Schwab also said political leaders need to step up and take action to boost growth, and to follow up on the actions of the world's central banks.

"Now it is the task of the politicians, but it is also the task of business leaders," he said.

"I think we have to see how, through innovation, we can create the necessary demand, despite the authoritarian policies we still have to follow in many countries… Now is the moment to take courageous action."

-By CNBC's Katy Barnato

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