Sunday 20 October 2019

Senior Minister Tharman Shanmugaratnam receives Distinguished Leadership and Service Award from the Institute of International Finance

Tharman receives international leadership award for contributions to global economy
By Charissa Yong, US Correspondent, The Straits Times, 19 Oct 2019

WASHINGTON • Senior Minister Tharman Shanmugaratnam has received an award for his contributions to global financial governance and public service from an international finance industry association.

The Institute of International Finance (IIF) awarded him and Bank of England governor Mark Carney its first Distinguished Leadership and Service Award on Thursday.

The award recognises individuals who have made distinguished and sustained contributions to the health of the global economy and financial system through their leadership, the IIF said in a statement.

The finance industry's global association is based in Washington DC. It has more than 450 members from over 70 countries, including commercial and investment banks, sovereign wealth funds, central banks and development banks.

IIF president and chief executive Timothy Adams presented Mr Tharman the award at the association's annual meeting in Washington.

Said Mr Adams: "You're a visionary, there's no doubt about it, and you should be recognised as a leading proponent of global reforms to de-risk and grow development finance and to achieve more resilient capital flows.

"Your ability to see around the corner and consider both the economic implications and the possibilities from the senior banker's perspective is incredibly unique and highly valued, and everybody around the world recognises your unique skills and talents."

Mr Tharman, who is in Washington until tomorrow for the annual meetings of the World Bank Group and the International Monetary Fund, said in a statement: "It is my privilege to receive this award from the IIF. It is to the credit of my colleagues at the Monetary Authority of Singapore and in the Singapore Government, and internationally, whom I have been working with to build resilient and growth-oriented financial markets.

"There is still much to be done to put in place the cooperative international networks and global financial reforms needed for more inclusive and sustainable growth."

Mr Tharman is also Coordinating Minister for Social Policies and chairman of the Monetary Authority of Singapore.

He currently chairs the Group of 30, a group of leading economists and policymakers from around the world.

In a wide-ranging fireside chat with Mr Adams after receiving the award, Mr Tharman said that what was truly unusual in the global economy today was a confluence of different uncertainties, ranging from geopolitical to domestic political concerns, such as the future evolution of liberal democracies.

"We're profoundly concerned. The prospect of a bifurcation, fragmentation of global supply chains, the way in which tech adds value and creates productivity, is a fundamental uncertainty now facing the global economy," said Mr Tharman.

Investment is also weak across the global economy because of this confluence of uncertainties that cannot be priced and are dampening investment in a whole set of sectors, he added.

Mr Tharman also warned of what he called slow-burn issues, such as climate change mitigation, the renewal of infrastructure and the pensions crisis - meaning the future inability of governments to fund their public pension systems.

"It's a looming crisis across the advanced world, and defined contribution and democratisation of pensions hasn't worked out the way it was meant to," he said. "A slow-burn issue, but slow-burning issues eventually end up in a fire.

"There's a massive need to address the slow-burn pensions crisis, because it's unsustainable and if we don't sort it out, it's going to pose an inequitable burden on the next generation," he said.

He called these profound uncertainties over the future - as well as the profound denial over the nature of the problem - a global issue.

Addressing these issues requires a long-term orientation in fiscal policy, but such an orientation is possible only with "faith in the centre of politics", he said.

"Without trust in politics and institutions, it's very hard to take a long-term perspective of things. Things reduce themselves to what happens in the next elections."

But such trust has to be created and earned with policies for inclusive growth - effectively, a new social contract, he added.

Tharman urges more focus on vocational education, says countries taking 'college premium' too seriously
Tharman highlights mismatch between people's abilities and needs of marketplace
By Charissa Yong, US Correspondent, The Straits Times, 19 Oct 2019

Countries have taken too seriously the expected boost in pay that college graduates get over their non-college educated peers, despite the bottom quarter of graduates not earning this "college premium" in reality, said Senior Minister Tharman Shanmugaratnam at an economics conference.

This focus on pushing high school graduates into universities has also led to a massive mismatch between people's abilities and the needs of the marketplace, said Mr Tharman, who called for a greater focus on vocational education in advanced economies.

He was speaking at a conference on reducing inequality in advanced economies organised by the Peterson Institute for International Economics on Thursday in Washington DC, where he will be attending annual meetings of the World Bank and the International Monetary Fund until tomorrow.

"We've been taking too seriously the college premium," said Mr Tharman at a panel discussion on education, noting that the college premium was actually an average, and not a standard amount that all graduates could expect.

"It's always been the case, going back to the 1970s, that the bottom 25 per cent (of college graduates) has hardly any premium over a high school grad. By pushing someone who's a high school grad into college, you don't get him or her to earn a college premium that's based on the average. It's always a marginal issue," said Mr Tharman, who is also Coordinating Minister for Social Policies and was Education Minister from 2003 to 2008.

In the United States, 40 per cent of people who enrol in universities do not even complete within six years, he said. A substantial proportion of those who graduate end up in jobs that do not require a college degree, he added, calling the phenomenon a "massive mismatch of abilities and the needs of the marketplace".

"The question is not, should you be a high school grad or should you be a college grad and hope to earn the average college premium. The question is, what form of post high-school education will give you a premium?" said Mr Tharman.

Addressing this requires a greater focus on vocational education, which is another way to develop soft skills, such as creativity, teamwork and cross-cultural skills in people, said Mr Tharman.

"The writing is on the wall. We have trundled into an overwhelmingly academically oriented college education and we need a rebalancing," he said.

The Senior Minister recounted how he had observed young people in overseas laboratories and training workshops, for instance, learning to adapt to something never seen before.

"It's different from reading a new novel. It develops a different set of instincts and skills," he said. "Yes, we've got to develop people so they can keep adapting to change throughout their lives. Doing it through an applied education is not necessarily inferior to the typical liberal arts model."

Market intermediaries can also change hiring practices to focus more on applicants' skills and not pedigree, he said.

He gave the example of Silicon Valley start-up GapJumpers, which has developed a system of blind auditions that lets companies upload skills challenges online and call the top scorers for interviews, all without knowing their social or educational background.

"We've got to think of all these new forms of intermediaries, first to reduce the social biases of hiring (in the) marketplace and secondly match skills supply and demand better than we're doing today," he said.

In his remarks, Mr Tharman also strongly championed public school systems of the sort found in Singapore and Finland, over the decentralised education systems of the United States and elsewhere.

The US, for instance, leaves aspects of funding, curriculum and teacher training to states and school districts, instead of having them all set by the national government.

Much of what ails decentralised education systems is that too much has been left to the social and economic marketplace, which practises social engineering, said Mr Tharman.

This starts with the increasing trend of people marrying others of a similar educational background, he said.

The best-educated and better-off parents also invest more in their children's education and enrichment compared with median-and lower-income parents, a trend sharply on the rise in the last 20 to 30 years.

Schools are also shaped by the neighbourhoods they are in, which are becoming increasingly different, he said, adding that these situations can be seen in the US and Britain, for instance.

Said Mr Tharman: "We're not any longer sure that meritocratic education systems are going to be able to blunt the advantages or disadvantages that kids bring with them from the home and from their social backgrounds in the same way they did at some point in the past in many countries."

Technological change has also prompted serious concerns everywhere in the world about whether current education systems can prepare a broad spectrum of young people well for a new era of jobs and work, he said.

"If we continue to see a stubborn polarisation of educational achievement based on social backgrounds... and we now see bifurcation of wage and job outcomes as a result of this new technological era, that combination is toxic," said Mr Tharman.

"It will undermine trust in meritocracy, in the state and in markets. It's a future that we have to avoid."

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