WEF founder says technological revolution 'will destroy employment'

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Story highlights

  • WEF Founder Klaus Schwab said "technological revolution" could destroy employment
  • Unemployment across the EU has remained stubbornly high at 10.9% since May
  • Schwab said policymakers are facing a "generational crisis of tremendous dimension"

The technological revolution is destroying jobs in Europe, according to the founder of the World Economic Forum (WEF), whose annual meeting is under way in Davos.

In an interview with CNN's Richard Quest, WEF chief executive Klaus Schwab said not enough is being done about structural unemployment in Europe and that advances in technology are hurting jobs.

"We have such a technological revolution going on at this moment. This will destroy employment. We have to make sure that the destroyed employment is replaced by better jobs and that's not happening at the moment," Schwab said.

WEF -- held on the remote snowy peaks of Davos, Switzerland -- is where world leaders and business giants meet each year to discuss issues affecting the global economy.

Schwab warned that today's policymakers and business community are facing the threat of a "generational crisis of tremendous dimension."

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"We have to make sure that the global leaders who are coming here, politicians and business leaders, take on again a longer term view because otherwise we have one crisis after the other one," he said.

Both the U.S. and Europe have been struggling to cope with recessions, low growth and high unemployment since the collapse of Lehman Brothers in 2008, a crisis that has reverberated through the global economy for over five years.

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    While the U.S. -- the world's largest economy -- has shown signs of an economic recovery with unemployment falling below 7% for December 2013, many nations in Europe are still suffering from the fallout of a five-year debt crisis.

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    Unemployment across the European Union's 28 member states has remained stubbornly high at 10.9% since May, with jobless rates in countries such as Spain and Greece hovering around the 25% mark, and youth unemployment over 50%, according to Eurostat, the European Union's statistical office.

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    Schwab said the key to restoring Europe's economy is to close the competitiveness, the measure of a nation's productivity, between member states.

    "You could have seen 20 years ago already that something is wrong with Europe because you had the northern countries, particularly Germany, performing very well, the southern countries lagging behind," he said.

    Since the eurozone debt crisis broke out in Greece in late 2009, four countries have requested bailouts from Europe's rescue funds, including Greece, Spain, Portugal, Ireland and Cyprus.

    But Schwab said nations in southern Europe are beginning to show signs of recovery.

    "[Competitiveness] should change and we see the first signs in Spain. We see very timid signs in Italy and in Greece. We will have to see what's happening in France."

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    The French economy has struggled for growth for two years due to high labor costs and government policies that critics say are punishing big business and the country's wealthy such as a 75% income tax rate for top earners.

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    However, at a news conference earlier this month French President Francois Hollande said he would tackle the country's high payroll taxes to improve competitiveness.

    Schwab said: "France is a large economy and in the last reports it has come down, I hope, now the necessary steps are taken to improve France's competitiveness."

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