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Preventing a "lost generation" of workers unable to get jobs is one of the world economy's biggest problems, according to delegates at the World Economic Forum.

One university professor said the US, the world's largest economy, is experiencing an "unemployment crisis".

Countries in the West are experiencing high levels of youth unemployment.

"People will accept austerity if we also talk about growth," Danish Prime Minister Helle Thorning-Schmidt said.

The region is struggling with a sovereign debt crisis, which has badly affected economic growth as governments have implemented tough spending cuts.

Data this month showed unemployment in the eurozone was at a record high in November, at 10.3%. There were 16.3 million people in the bloc out of work.

Spain, for example, has the highest unemployment rate in Europe, at 22.9%.

"It is also very important that we remember people are willing to make sacrifices, but not be sacrificed," Mrs Thorning-Schmidt said during a session on rebuilding Europe.

The WEF's annual gathering is being held in the Swiss ski resort of Davos.

More than 2,600 delegates - including world leaders, economists and business chiefs - are attending the conference.

'Not debt crisis'

In another session at Davos, Professor Peter Diamond, of Massachusetts Institute of Technology, painted a stark picture. The US unemployment rate is now under 9%.

"The US is having an unemployment crisis and a debt problem, and the problem with Washington is that they are acting as if we have a debt crisis and an unemployment problem.

"And that is unfortunate," he added.

In the UK, data this month showed the number of young people looking for work at a new record of 1.043 million, taking the unemployment rate for 16-24 year-olds to 22.3%.

Another panellist, the International Labour Organization's Juan Somavia, said: "There is no understanding of the problems that young people have beyond finding jobs."

Mexican example

Meanwhile, in another session, Mexican President Felipe Calderon, whose country is currently president of the G20 richest nations, talked about the importance of strong international institutions to tackle economic crises.

For Mexico, the support of the US Treasury under President Bill Clinton was crucial during the economic crisis his country suffered in the late Nineties.

"It is necessary to import credibility," he told the audience at Davos. "That is where the G20 comes in."

Pointing to the situation currently facing Spain and Italy - which have faced very high borrowing rates in recent months - Mr Calderon said: "It is necessary to create a firewall to prevent the spread of panic to countries that are solvent but lack liquidity."

"The firewall, more than a source of money, is a source of confidence. The more confidence you create the less money you need. The opposite is also true."

He said it was imperative to strengthen international institutions, whether that be the G20 or, in Europe's case, financial rescue facilities such as its rescue fund.

Speaking of the so-called "lost decade" in the 1980s, when Latin America underwent a painful debt crisis, Mr Calderon said his country had learnt that any economic adjustment programme to bring down the debt must also be accompanied by social programmes.

He said that during the middle of the crisis, Mexico had increased help to poor people through its Opportunidades policy, which concentrated on health, education and nutrition, to try to combat poverty.

Stronger international institutions would also be crucial in efforts to restart economic growth.

The G20, for example, needed to ensure financial markets are regulated to prevent a new economic crisis, he added.