Jobless rate still high

July 31, 2004
Singapore Democrats

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http://sg.biz.yahoo.com/040730/15/3m2vf.html
Dow Jones
30 July 2004

Singapore’s unemployment rate stayed at 4.5% for the third consecutive quarter in the April-June period as fewer jobs were created despite the strong economic recovery.

Employment rose by about 10,400 in the quarter, according to preliminary estimates by the Ministry of Manpower Friday, a smaller gain than 13,700 in the first three months of the year and 16,200 in October-December last year.

The data surprised economists, who had expected the jobless rate to improve to 4.3%, and raise doubts whether unemployment can fall to 4% by year-end, as forecast by the Monetary Authority of Singapore.

GK Goh regional economist Song Seng Wun estimates that more than 20,000 jobs will have to be created in each of the next two quarters if unemployment is to fall to 4%. “That might be a tall order,” he said.

UOB-Kay Hian economist Leslie Tang, however, is sticking to his forecast that unemployment will fall to 3.8% by year-end.

“Given that retrenchments have slowed and jobs are still being created gradually, we remain optimistic that we should see an improvement in the unemployment rate by year-end,” he said.

According to the manpower ministry, preliminary data showed that 1,900 workers were retrenched in the second quarter, down from 2,962 in the previous quarter. Total employment was 2.16 million at the end of June, the ministry said.

Singapore’s economy grew 11.7% year-on-year in the second quarter according to the government’s advance estimates, following a 7.4% expansion in the first three months of the year.

The strong performance followed years of insipid growth as the island was first hit by the 1997/98 Asian financial crisis, which was followed by the dot.com crash at the end of 2000 and a SARS outbreak last year.

Singapore is, however, struggling with structural unemployment, as growing industries like biomedical and financial services fail to absorb older, lesser-educated workers displaced by the relocation of factories to China and other low-cost locations.

J.P. Morgan Chase economist Lian Chia-Liang said there is a still-significant structural component in Singapore’s unemployment, particularly among locals, noting the gap between the resident jobless rate and the overall rate has widened compared with the 1990s.

Among citizens and permanent residents, the jobless rate was 5% in June, marginally lower than 5.1% in March, the manpower ministry said.

It added that without adjusting for seasonal influences, the overall unemployment rate rose to 5.3% in June from 3.8% in March, reflecting the increase in the number of job seekers as this year’s batch of university and polytechnic graduates enter the labor market.

Among the resident labor force, the non-adjusted unemployment rate was 5.9%, up from 4.3% in March.

An estimated 103,000 residents were unemployed in June 2004, while the seasonally adjusted figure was 89,000, the ministry added.