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Looming pensions crisis in advanced world: Tharman
THERE is a looming pensions crisis and serious structural issues linked to the shortage of medium-and upper-end skills in the advanced economies that must be tackled, said Tharman Shanmugaratnam, Deputy Prime Minister and Coordinating Minister for Economic and Social Policies.
"A problem that is creeping on the United States, and much of the advanced world, is we have a looming pensions and healthcare financing crisis. In time to come, that will be the big crisis," he told participants at The Straits Times Global Outlook Forum on Friday.
"Commitments have been made, which have to be paid, and their economies are not going to be able to pay for these commitments. The burden will have to fall on the younger workforce, or higher taxes, or there will have to be some harsh decisions to cut commitments, which few politicians are willing to do, because these are cutting commitments from older voters who are an extremely important bloc in all democracies."
Over in the United States, there are serious structural issues with the severe shortage of skilled labour, such as nurses and technicians. This comes as real wages there have been stagnant for a long period of time, and predating the financial crisis, he said.
And while a lot of attention has been cast on the Federal Reserve's decision to raise rates, the eventual lift in rates would not determine the fundamentals.
"It has to be said that monetary policy has not been very effective in stimulating a recovery, and particularly, effective in stimulating sustainable growth," Mr Tharman said.
Meanwhile, China is embarking on changes in reforming its markets, which are complex. Its manufacturing sector is also evolving to one that takes a greater share of inputs from China, rather than the rest of Asia, a shift that Mr Tharman called an "onshoring of supply chain".
This comes as the confluence of cyclical and structural issues has made policymaking more complex today, he added.
"Part of the complexity of the world comes from the fact that we're seeing a confluence of both cyclical and structural factors at the same time, in virtually every economy."
As part of Singapore's focus on skills and productivity, the culture here must shift to one that respects lifelong learning, and pride in mastery.
"We have to reduce our focus on what happens early in life ... on what grades we get early in life," Mr Tharman said, adding that grooming a creative population comes with embracing diverse experiences, and daydreaming.