99,000 jobs may go

UNEMPLOYMENT could surge beyond the levels of recent recessions to hit a 20-year high of 5 per cent next year, according to a new report by DBS.

Its Singapore economist, Irvin Seah, estimates that the economy will contract 4.8 per cent this year, bringing about a total of 99,000 net job losses in the current recession. Manufacturing would be the worst hit with about 58,000 jobs lost, he added.

Mr Seah expects the unemployment rate to 'rise steadily' to 4.8 per cent by the end of the year and peak at about 5 per cent by the midde of next year. This would be the highest level of unemployment since the manufacturing recession in 1985 and 1986, when the rate hit 6.5 per cent, he said.

While the unemployment rate briefly touched 4.8 per cent in 2003 due to Sars, for the most part it stayed below 4 per cent in 2003 and 2004. But in the current downturn, Mr Seah expects unemployment to surpass 4 per cent in the second half of this year right through next year.

Said Mr Seah in the DBS report: 'Singapore is likely to experience its worst ever growth this year with a GDP contraction of 4.8 per cent. Labour markets are expected to deteriorate further.

'The unemployment rate will likely hit 5 per cent with cumulative job losses expected to reach 99,000 by 2010. Policy measures that have been put forth so far will help to cushion the blows but the worst of the labour market cycle is yet to come.'

The Singapore economy shrank by 3.7 per cent in the fourth quarter of 2008, compared to a year ago. Non-oil domestic exports plunged by 17.7 per cent in the same quarter, down significantly from an average negatove 4.2 per cent for the first three quarters of last year.

NODX growth in January plummeted by 34.8 per cent - the sharpest single month decline ever and a clear reflection of the collapse in global demand. Singapore's unemployment rate has risen in the previous two quarters as the labour market continued to feel the heat of the global recession.

About 73,100 Singapore residents were jobless in December last year, an increase of about 58 per cent over a year ago. Job growth also slowed significantly, with just 26,900 jobs created in the fourth quarter, which is less than half the total gain of 55,700 in the previous quarter.

'Against the backdrop of the dire economic conditions, this is probably just the initial stage of a protracted down-cycle in the employment market. Job losses and unemployment rate will continue to rise as companies struggle to cope with the impact of the global downturn,' said Mr Seah.

- The Straits Times