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22 December 2003
Singapore’s government said on Monday it expected the unemployment rate, which hit a 17-year high of 5.9 per cent in September, to worsen further, before falling early next year.
“This year it is likely to get worse because the job market usually lags economic recovery,” the acting Minister for Manpower, Ng Eng Hen, said in excerpts from an upcoming Ministry of Manpower annual report.
“If the Singapore economy recovers, then the job situation should recover in the second or third quarter next year,” he was quoted as saying in the report.
Quoting the annual report, Singapore’s Business Times newspaper reported on Monday the city state’s jobless rate may have already exceeded a record high of six per cent posted in March 1986.
A ministry spokeswoman confirmed Ng’s comments but declined to comment on whether the jobless rate was expected to set a new record high.
Singaporean jobs have come under pressure as the electronics manufacturers at the heart of the island’s $89 billion economy face growing competition in key export markets such as the United States from low-cost rivals such as China and India.
In the April-to-June quarter, Singapore’s economy contracted at a record annualised rate of 11.4 per cent as tourists shunned the city state due to the SARS outbreak.
The economy rebounded in the following quarter at an annualised rate of 15 per cent as visitors returned, global electronics demand picked up and pharmaceutical output surged.
The median expectation from economists surveyed by Reuters is for the economy to grow one per cent for 2003, and to accelerate next year to 5.5 per cent.
Last week, Lim Boon Heng, the secretary general of the National Trades Union Congress, said Singapore’s unemployment rate should ease to four per cent next year, as the economy recovered.
However, Ng was less optimistic. He told reporters on Friday he expected an unemployment rate of 4.5 to 5.5 per cent in 2004.
That was more in-line with private-sector economists.
The median forecast of 25 economists surveyed last month by the Monetary Authority of Singapore, the nation’s central bank, was for unemployment to fall to 5.5 per cent at the end of 2003 and end 2004 at 4.5 per cent.
Ng said in the report that past days of full employment would not return as Singapore faced competition from low-cost rivals such as China.
He said he expected unemployment to settle at about three to four per cent in the long term, compared with the near-full unemployment rate of two per cent previously seen in boom years.