NEW YORK (CNN) - Federal Reserve Chairman Alan Greenspan said Monday that new jobs will replace old ones lost to low-wage countries like China but that plenty of workers will suffer in the meantime.

The jobs will come back if the nation's economy remains innovative and workers are retrained, the central bank chief said in a speech prepared for an economic conference in London.

He also warned against building barriers to free trade to protect jobs, noting such a plan could end up hurting economies in the United States and elsewhere.

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"We can be confident that new jobs will displace old ones as they always have, but not without a high degree of pain for those caught in the job-losing segment of America's massive job-turnover process," Greenspan said.

Speaking via satellite, he said the process of losing jobs to overseas competitors where lower wages are paid is not new. Jobs migrated to Japan in the 1950s and '60s, to Mexico in the '90s and more recently to China.

This is because the U.S. economy is producing more "conceptual," technology-driven jobs, while lower paid jobs that require mainly manual skills are disappearing as U.S. companies find it impossible to compete with overseas firms that pay much lower wages.

"This diminishing of opportunities for such workers is why retraining for new job skills that meet the evolving opportunities created by our economies has become so urgent a priority," Greenspan said.

The Fed chief said for countries at the forefront of technology, "most new jobs are the consequence of innovation, which by its very nature is not easily predictable."

One reason Greenspan remains confident: over the years the nation managed to keep more than 94 percent of its work force employed.

Greenspan also warned lawmakers against passing laws to limit trade and heading back toward protectionism in a bid to keep jobs in the United States. He said trade barriers could destabilize the global economy, adding that an open flexible economy is needed to help it weather big shocks.  

-- from Kathleen Hays, Economics Correspondent