Singapore unemployment rises to 17-year high

Singapore unemployment rises to 17-year high

Martin Abbugao, Agence France-Presse, Singapore

Singapore's overall unemployment rate surged to a 17-year high
of 5.9 percent in September with the city-state's fragile
economic recovery not doing enough to absorb a rising pool of job
seekers, the government said on Friday.

Employment in the three months to September showed signs of
picking up after eight consecutive quarters of declines but
retrenchments continued and new graduates have joined the job
market, the manpower ministry said.

Formerly inactive workers have also started looking for
employment, attracted by forecasts of better economic growth in
the second half, pushing the unemployment rate up.

"Although employment is starting to improve, the gains are not
sufficient to absorb the increased pool of job seekers as this
year's new entrants join the labor market," the ministry said in
a statement.

"Preliminary estimates show that the seasonally adjusted
overall unemployment rate rose from 4.5 percent in June 2003 to
5.9 percent in September 2003."

Among the resident labor force -- Singaporeans and permanent
residents -- the rate was 6.3 percent at end-September, also
higher than the 4.9 percent in June.

The overall unemployment rate far exceeded the peak of 4.3
percent recorded during the 1997-1998 Asian financial crisis, and
was just a notch below the record 6.0 percent jobless rate during
a recession in 1986.

An estimated 3,700 workers were retrenched in the September
quarter, up 28 percent from the previous year, but less than the
5,144 laid off the previous quarter. The total number of
unemployed residents was at 95,500.

Goods-producing industries, most of them in the electronics
sector, accounted for more than half of those laid off in the
September quarter.

Standard Chartered Bank economist Joseph Tan said he expects
the seasonally adjusted unemployment rate, which includes new
entrants to the job market, to have peaked in September.

Tan also pointed to the manpower ministry figures showing that
if seasonal factors were excluded, the unemployment rate actually
fell to 4.9 percent in September from 5.4 in June.

"There are signs of the labor market recovering. Retrenchments
were less than that of the last quarter," he told AFP. "I suggest
that the labor market is on the repair."

Tan noted that recovery in the labor sector normally lags
behind an economic rebound by six months to a year.

The government expects gross domestic product (GDP) to grow
between zero and one percent this year as it recovers from the
impacts of the Iraq war and Severe Acute Respiratory Syndrome
(SARS).

Government forecasts say the unemployment rate will top 5.5
percent this year.

For the unemployment rate to improve, Singapore needed to
reach the stage when retrenchments are reduced to a few hundreds,
Tan said, adding this could happen in the second quarter of next
year.

The Singapore stock market on Friday ignored the near-record
jobless rate, with the benchmark Straits Times Index rising 4.45
points in mid-afternoon trading to 1,719.75.

Dealers said investors were focusing on signs the economy was
on the rebound, with banking stocks leading the rise on news that
lending rose 3.8 percent to S$167.03 billion (US$96 billion).