Lack of quality jobs is major challenge globally: Tharman

By Aaaron Low, The Straits Times, 1 Aug 2012

CREATING enough quality jobs is one of the greatest challenges facing countries around the world, Deputy Prime Minister Tharman Shanmugaratnam said yesterday.

Mr Tharman told a conference here that not doing so could mean more polarised politics but success can ensure the foundations of an inclusive society.

"If you connect the dots, you can't help but come to the conclusion that the key challenge for the future is jobs. Not just the quantity of jobs but the quality of jobs," he added. "In fact, we are now - if you look globally - in the midst of a jobs crisis, a very severe jobs crisis, that has not been seen in decades."

Mr Tharman, who was speaking to South-east Asian policymakers and academics at the Asia Competitiveness Institute conference at the Orchard Hotel, noted that youth unemployment in advanced economies is very bad.

It has hit about 23 per cent in Europe overall but is higher in countries like France and Spain. It is a similar story in the United States, with 17 per cent of youth without a job.

This lack of work could lead to permanent effects on an entire generation, warned Mr Tharman, who is also Minister for Finance.

"The experience in many economies has shown that once young people are unemployed for an extended period, it often has permanent effects.

"The risk is that whole lives are blighted in these societies, and you end up with a wasted generation, who find it difficult to get back into the mainstream of the economy and society."

And it is also crucial to keep creating jobs for mature, middle- level workers.

Mr Tharman noted that the employment prospects of such workers in the US are declining even as wages stay stagnant. The problem could intensify with another 184 million graduates from China and India entering the global workforce in the next 20 years.

"There are political ramifications of this job polarisation. When the middle becomes insecure, politics gets more polarised and becomes more fragmented," he added.

The challenge for Asia's emerging economies is helping its young people. Depending on how policy-makers deal with the situation, they could be a demographic dividend or demographic deficit.

He said one solution is simply to equip the younger generation with the right skills rather than with just a general degree.

"The reality in both advanced economies and emerging ones like China is that there are only so many jobs for people with a general academic degree," he said.

So it is important to move away from the academic bias and towards nurturing people with the right applied skills that companies need, he said.