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).