Acting Manpower Minister Gan Kim Yong has said the unemployment rate due to the current recession in Singapore could reach the levels recorded during the Asian financial crisis in 1998 and the economic downturn in 2001.
And, with the US and European economies likely to recover only in the second half of this year, Trade and Industry Minister Lim Hng Kiang warned that recovery will be a slow process.
Both ministers laid out the jobs situation in Singapore in Parliament on Monday.
The industries that may be most affected by job losses are manufacturing, tourism, transport and wholesale trade. These are the sectors that are most exposed to the external economic environment. The financial services sector will also remain weak.
Mr Gan said based on preliminary numbers, some 8,100 workers were either laid off or facing retrenchments in the fourth quarter of last year and over the next few months.
Already, some 7,400 workers lost their jobs in the first three quarters of last year, two thirds of whom are locals.
The silver lining is that more than 30,000 new jobs will be available in growth sectors such as construction, healthcare, public administration and the integrated resorts.
Mr Gan said: "Close to 30,000 workers were retrenched in 1998 due to the Asian financial crisis, and about 26,000 workers were retrenched during the economic downturn in 2001. If our economy were to contract sharply this year, it is possible that retrenchments could reach these levels seen in previous recessions."
Also speaking in Parliament, Minister Lim said Singapore's job losses will increase and consumer sentiment will weaken as the manufacturing and financial industries slow further this year.
He said the economic slump has spread to all parts of the economy.
Mr Lim said 2009 will be a difficult year with consumer demand in key exports markets such as the US and Europe expected to remain weak.
As such, the manufacturing sector will continue to face a slowdown.
The financial sector meanwhile is expected to see a sharp decline because of the impact of the financial crisis.
Mr Lim also said weaker consumer sentiment among Singaporeans has affected the retail sector and the property market.
But he said there are still sectors that are showing positive growth.
These sectors collectively make up slightly less than 10 per cent of the economy. As such, Mr Lim said their growth will not be able to compensate for the decline in other sectors.
Mr Lim also said the government's S$2.3 billion loan support package for businesses in Singapore has been "promising".
Giving an update in Parliament, Mr Lim said banks' loan commitments increased even before the scheme was introduced in December last year.
For the whole of last year, loan commitments rose by 50 per cent to over S$1 billion, compared to S$680 million registered in the previous year.
Since the government-backed loans for businesses were launched in December, some 500 applications were received in that month alone.
Mr Lim added that the approved loans for December last year increased by 30 per cent over the same period in 2007, rising to S$80 million from S$62 million.
MPs also raised their concerns about what may be an oversupply of foreign workers during this current downturn, leading to foreign workers without jobs or competing for jobs with Singaporeans.
Mr Gan said his ministry will monitor the situation and calibrate companies' access to foreign workers. He also warned that if foreign workers were the first to be laid off in a retrenchment exercise, this may adversely affect the competitiveness of companies.
Mr Gan said: "On the supply side, the Dependency Ratio framework helps to ensure local employment since companies' access to foreign workers is dependent on the number of local workers they employ.
"The foreign worker levy, on the other hand, helps to moderate demand for foreign workers. If companies are required to retrench only foreign workers, they may be forced to close down or move to countries where they can have unlimited access to even cheaper labour.
"This will result in more job losses and in turn affect Singaporeans who work for these companies. This is a lose-lose outcome," said Mr Gan.
- Channel News Asia
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