Business World

Tuesday 2 September 2014

Davos shows we are not alone in our problems

Published 24/01/2013 | 05:00

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FOUR themes em-erged again and again on the first day of the World Economic Forum in Davos, and by coincidence all of them have huge relevance to Ireland. We are not alone.

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The first theme, on the day David Cameron gave his long-awaited speech on the UK and Europe, was Britain's relationship with the EU.

The second was the lack of trust in banks, while the third was the seemingly intractable problem of youth unemployment almost everywhere in the world. In fourth place was the cost of healthcare and the endless demands for new and expensive treatments.

Ireland's ties with Britain are so close that it is difficult to think of a country that would be more affected by any British withdrawal from the European Union, but there was resigned disappointment in many other quarters too, judging by the off-the-record reactions from participants in Davos yesterday.

Still, almost nobody in the Swiss ski resort wanted to speak on the record as they awaited the arrival of David Cameron today and a speech in which he is expected to explain himself.

The inability of banks and other financial services companies to win back trust as the crisis abates also played on many people's minds.

A survey published by public relations company Edelman to coincide with Davos showed that trust in financial services remains low almost everywhere, though no country seems as disillusioned as Ireland.

UBS chairman Axel Weber was among the most forthright about the problem banks face when winning back society's support, and offered some advice – re-engage with customers.

"Financial services need to be reminded that it is all about service," he said. Mr Weber knows all about these problems. Since becoming chairman in May, UBS has seen a trader jailed for seven years, been found guilty of fraudulently selling interest rate swaps in Milan and paid a $1.5bn (€1.1bn) fine for manipulating the Libor rate.

This year's World Economic Forum shows all too clearly that bankers were too optimistic about their prospects for rehabilitation at last year's Davos.

Credibility

That meeting saw several leading bankers declare prematurely that the battle for credibility had been won.

Several of those bankers such as Barclay's Bob Diamond have since been forced to resign and the banks they once ran are still in trouble.

The third theme with resonance in Ireland is the number of young people out of work. With youth unemployment running at 50pc in countries such as Greece and Spain and at alarmingly elevated levels elsewhere, the problem was mentioned in several discussions.

"How can we engage the young generation with clear paths to economic and social success?" asked Coca Cola chief executive Muhtar Kent.

His answer was similar to those given by other speakers – education. "The whole discussion is how we can make jobs," was how Mr Weber put it.

While education seems obvious, there were few other suggestions about what to do with those who have learned skills that are no longer relevant.

Listening to these captains of industry worrying aloud about youth unemployment, it was difficult sometimes to suppress the doubtless unworthy thought that much of their concern stems from the dangers to political and economic stability posed by tens of millions of angry and frustrated youngsters.

While it is probably unfair to be cynical about the fine words devoted to the young, it was impossible not to feel a flicker of anger at the repeated calls for a cap on healthcare spending from people who will almost certainly never have to step into a state-run hospital anywhere.

Still, the harsh reality is that they are right. The rest of the world faces the same problems that the Health Service Executive faced in Ireland this week with medicines for cystic fibrosis – how to limit spending in the face of rising demand and ever better medicines.

To that end, one of today's main discussions will focus on building sustainable health systems and the publication of a report on how health systems might look in 2040.

That, after all, is what Davos does best – identify important problems beyond the immediate and then offer solutions.

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