Business leaders, politicians and labor organizations warned on Thursday that urgent action needs to be taken to prevent Europe's youth from becoming a lost generation, a development which could have severe social consequences.
New unemployment data out of Spain released on Thursday served as a stark reminder of the fundamental structural problems of some of Europe's hardest-hit economies. Spanish unemployment rose to a record high of 26 percent in the final quarter of the year, leaving some 6 million Spaniards without a job. Youth unemployment rose to a staggering 60 percent, a new record.
"The thing that we have to find even better and quicker solutions for is youth unemployment. I think that has a chance of cracking the social fabric. When you look at 40 percent unemployment for the under 28-year olds – that's something that we can't continue to go forward with," Muhtar Kent, Chairman and CEO of Coca-Cola told CNBC at the World Economic Forum in Davos on Thursday.
Asked how to fix the youth unemployment problem, Kent told CNBC that it is key to" reform the education system quicker to address the gaps of capabilities between what the businesses need today and what the universities are providing".
German Chancellor Angela Merkel told delegates at the Forum that "our big burden right now is youth unemployment in Europe."
"Whoever is willing to step up to the plate and give at least a small contribution to opening up a perspective to young people, I can only invite you do this in Europe. We welcome anyone with open arms who gives some hope to young people," she said.
Guy Ryder, the director general of the International Labor Organization told CNBC that the "impacts of the [Spanish unemployment levels] are catastrophic and it is very difficult to image what the social consequences of this are".
Ryder added that the notion of a "lost generation sounds like a cliche, but it's a reality for the youth in Europe."
Ryder also warned against the danger of complacency given the optimism in the markets based on the expectation that Europe has turned a corner: "We have to be very,very careful that we don't exclusively focus on the financial aspects, but now more than ever we need to pay much greater attention to the jobs situation."
Earlier this week, the Geneva-based UN jobs agency ILO (International Labor Organization) said global unemployment levels could top the record levels of 2009. According to the ILO's "Global Employment Trends 2013" report, global unemployment will rise by 5.1 million in to more than 202 million in 2013 and could increase by another 3 million in 2014.
The CEO of Adecco, the world's biggest staffing company said the group's key markets, such as Germany, France and the U.S. "may return to growth in second half of the year, but the first six months will still be very, very tough".
"We haven't made progress yet, unemployment will further increase in the next couple of months, especially in Europe, even though it is holding up pretty well in U.S.but as far as Europe is concerned, it will rise further unfortunately," Patrick de Maeseneire told CNBC in Davos.
"But I hope that we will be going for the 2009 scenario again, where industrial employment picked up in the summer."
On Thursday, more news of job cuts came when the Wall Street Journal reported that British bank Barclays was cutting 15 percent of its investment banking staff across Asia.This follows widespread cuts in the banking sector by virtually all global investment banks to respond to a tougher regulatory and market environment.