Jobs Real Solution to Crisis in Western World: Leaders
As consternation about the euro zone debt crisis and slowing growth in the US increases, political leaders should focus on job creation, business leaders at the conference dubbed the "summer Davos" told CNBC.
"Without jobs, we are not going to get even the modest growth that we desperately need in the Western world," Sir Michael Rake, chairman of BT the British telecoms company, told CNBC Wednesday.
"For job creation to happen, businesses have to feel confident about the future, and that requires strong political leadership."
He was speaking at the summer meeting of the World Economic Forum, held in Dalian, China, which focuses on the emerging Asian powers.
Sir Martin Sorrell, chief executive of advertising firm WPP, told CNBC: "Corporates are not going to take on marginal hires, and consumers are not going to make marginal purchases, whether it be automobiles or domestic appliances, at the moment."
He added that the majority of businessmen polled by WPP at Dalian had said that they would increase their investment in the BRICS – Brazil, Russia, India, China and South Africa.
"We should be targeting unemployment, targeting tax incentives, targeting the structure of the labor market," Moorad Choudhry, Head of Business Treasury, Global Banking & Markets, Royal Bank of Scotland told CNBC.
"On both sides of the Atlantic, the really big issue is unemployment."
President Obama's $447 billion jobs package, announced last week, dominated headlines for most of the week.
It combines tax cuts and tax credits to encourage businesses to hire with increased taxes on big corporations and the super-rich.Unemployment is currently at 9.1 percent in the US, fuelling fears that the world's largest economy could be facing a second recession in three years.
The number of unemployed people in the UK rose above 2.5 million for the first time since November 1994, swelling by 80,000 in the three months to July, disappointing labor market data showed on Wednesday. The increase was the largest since August 2009.
High youth unemployment in some of the euro zone countries, particularly Spain and Ireland, is an increasing cause for concern.
Levels of youth unemployment are "just unsustainable" in some countries, Choudhry said.
"It’s a real waste of resources and a social blight, and we don’t see enough measures targeting it from politicians," he said.
The possibility that some of the emerging economies may have to help bail out the more advanced Western economies has gained new credibility this week.
Wen Jiabao, the Chinese premier, said at the conference on Wednesday that China is prepared to help Europe through its debt crisis, but that China should achieve "full market economy" status from the European Union (EU) in return.
Full market economy status, which China is due to receive from the World Trade Organization (WTO) in 2016, would help Chinese companies in trade disputes with their European counterparts.
On Tuesday, Brazil Finance Minister Guido Mantega said officials from the BRICS will meet in Washington ahead of next week's IMF meeting to discuss what they can do to help the EU with the credit crisis.
"The strong leadership is from this part of the world," said Sorrell.
"We are all staggered by the lack of concentrated connectivity between leaders of Western Europe to deal with their problems."