Singapore's jobless rate rises unexpectedly to 3.9%

Hooray for the variable wages scheme! Now the employees can take the strain in order to ensure that the employers profits continue to increase year after year, while at the same time face the threat of being made 'retrenched' [read fired without compensation] if they refuse to go a long.

Singapore's jobless rate rises unexpectedly to 3.9%
By John Burton in Singapore Published: May 2 2005 03:00 | Last updated: May 2 2005 03:00

Singapore workers yesterday celebrated May Day facing the prospect of increased unemployment after the government reported that the jobless rate had unexpectedly risen to 3.9 per cent in the first three months of 2005.

"I know that workers are a little apprehensive because job creation has slowed down and a few major retrenchments are in the pipeline" but the economic outlook "remains positive", said Lee Hsien Loong, the prime minister.

The Manpower Ministry recently warned that the jobless rate could climb because of slower economic growth. It urged companies and workers to adopt a flexible wage system to minimise job losses.

Fewer jobs were created in the period, with 11,600 new jobs against 32,700 in the fourth quarter of 2004, which represented the strongest gain in four years.

Some economists believe that a possible economic recovery in the second half of this year might reduce the unemployment rate, since the number of those losing their jobs in the first quarter fell by 38 per cent from the previous quarter to 2,000 workers.

But Singapore will have to digest some big planned job cuts in the coming months, including the redundancies of 5,500 workers at Maxtor, a hard disk drive maker, which is moving production to China.

The jobless rate is nearly double the 1.9 per cent rate before the Asian financial crisis of the late 1990s, but is sharply down from a 17-year high of 5.7 per cent in the third quarter of 2003.

The manpower minister recently estimated that the unemployment rate this year would stay between 3.5 per cent and 4 per cent, with fewer jobs being created owing to a shift to higher-valued activities and the slowdown in economic expansion to 4 per cent from 8.4 per cent in 2004.

But Singapore must still deal with growing structural unemployment.

In addition, the city-state's high labour productivity means less need to create new jobs.

Singapore's workers have been the world's most productive labour force for the past 26 years, according to a new survey by the Washington-based Business Environment Risk Intelligence.