GO
Loading...

Southern Europe risks a 'lost generation:' World Bank

Southern Europe is facing the risk of losing a whole generation to chronic unemployment, the president of the World Bank has told CNBC at the World Economic Forum (WEF) in Davos.

"Among the things that we're especially concerned about are the extremely high rates of youth unemployment because that has implications not just for the short term, but especially in the medium to long-term," World Bank President Jim Yong Kim said.

"We're even talking in some countries about lost generations. It's unthinkable that we would lose a whole generation in some of these southern European countries."

(Read more: Youth unemployment EU's 'single biggest crisis': Irish PM)

Kim's comments came after Enda Kenny, Taoiseach (Prime Minister) of Ireland, told CNBC that youth unemployment was the EU's "single biggest crisis," and followed the latest International Labour Organization (ILO) report this Monday, which estimated that some 74.5 million young people aged 15–24 worldwide were unemployed in 2013.

Brendan Smialowski | AFP | Getty Images

That figure is almost 1 million more than in the year before and brings the global youth unemployment rate to 13.1 percent.

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.

(Read more: Recovery talk ignores jobs crisis: Davos delegates)

Kim said that world leaders could learn from Switzerland's employment model, where only 25 percent of young people go on to college, while the rest are put into apprenticeship and vocational training programs.

"There are models to attack this particular situation," he said, adding, "We think that the southern countries have to move quickly in looking at those.

Kim also said that with the announcement last month that the U.S. Federal Reserve would begin to slow downits bond-buying program, there was now an opportunity for many nations to begin to make the necessary reforms to improve the business environment.

"In many countries still there are current account deficits and fiscal deficits, and they simply have to be dealt with...many countries have to think about the growth prospect of coming back; improving your business environment, making it easier to start businesses; just basic things," he said.

He concluded: "What we would say is the window that has been given to us with the gradual tapering is one that is an opportunity that they should grab right now and make those reforms."

—By CNBC's Kiran Moodley. Follow him on Twitter @kirancmoodley

Videos

Latest Special Reports

  • Financial advisors stress that now is the time for investors to get serious about year-end financial planning checkup.

  • Is an active twist on passive investing the right portfolio move? An inside look at the rise of ETF strategists.

  • The nexus of technology -- cloud, social, mobile and data -- are transforming user behaviors and creating new businesses.

World Economy