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Guarantee Greece? Try 'Guaranteeing Small Enterprises'

Wednesday, 28 Sep 2011 | 5:31 AM ET

As the sovereign debt crisis is hits Europe and the idea of a double-dip recessionis starting to spread all over the world, G20 labor ministers gathered in Paris on Tuesday said job creation, particularly by small enterprises, was crucial in overcoming the financial crisis and warned that austerity measures needed to be balanced with the creation of jobs.

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"Today, we have been talking about bringing confidence to the people," Juan Somavia, director general of the International Labour Organization, told CNBC.

"We have, in the past, had high growth, but low job creation," Somavia said, adding that this had to change and that governments needed to consider jobs as a target rather than a result.

"The objective needs to be jobs, and we'll see how to organize the economy accordingly," Somavia added, "otherwise, it will be very difficult to get out of the pattern we are in."

Small businesses are today's "job creating machine," the ILO director general said.

He warned that those firms have a hard time accessing funding, and at a time when so many governments need to undertake austerity measures, unconventional forms of help may need to be invented.

"On one hand, we guarantee Greece, why not guaranteeing small enterprises?" Somavia asked, before saying that the financial sector needs to be at the service of the real economy.

Since the 2008 financial crisis hit the markets, efforts have been turned towards supporting the economy through the financial sector.

"We have lived with the idea that deregulation is the key… it needs to be a tool," he said, explaining that even though deregulation is indeed sometimes needed, it must be done so in a targeted way, in order to pursue a specific goal, such as employment.

If jobs are created, another unemploymentfactor is the mismatch between education and what the market requires.

"One can be very educated, but have no jobs," he added, pointing to the case of Spain.

These education issues have been spotted by the G20 members, who promised to create a task force on youth unemploymentto asset the problem. Mexico, which will take over the G20 after the end of the French presidency, promised to carry on the initiative and efforts on the matter.

Contact Europe: Economy

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