High Q1 growth figures not sustainable, he says in May Day message
PRIME Minister Lee Hsien Loong is upbeat about Singapore's economy, saying it has emerged from the recession in a strong position and will end the year on a good footing.
His outlook is bolstered by official labour figures released yesterday that show a healthy job market: New jobs continue to come onstream in the first quarter and the jobless rate held steady at a low 2.2 per cent.
But PM Lee's message of cheer is laced with a note of caution, that the spectacular growth figures of the first three months of this year are not sustainable.
In his traditional May Day message, he put the remarkable performance in perspective again, reiterating the point he made on the day the economic results were announced two weeks ago.
'The jump represents a transient rebound from the sharp dip last year and is not a sustainable long-term growth rate,' he said yesterday, ahead of Labour Day today.
Compared to a year ago, the economy grew by a robust 13.1 per cent - the biggest gain in 16 years. It led the Government to revise its growth forecast for the year to between 7 per cent and 9 per cent, up from between 4.5 per cent and 6.5 per cent.
Some analysts, however, are even more bullish, predicting a possible double-digit growth this year.
Tempering such economic exuberance, Mr Lee said: 'This quarterly growth figure reflects the volatility of our small, open economy.
'Some sectors like electronics and biomedical sciences expanded sharply, but others have not done quite as well.'
But he holds out this assurance: The overall economic outlook remains rosy.
'We have emerged from the storm in a strong position and can look forward to a good year this year,' he added.
'We must make the most of this opportunity to push forward our longer-term plans - transforming the economy, upgrading our workforce and raising our productivity.'
He called on companies to focus on improving quality, not quantity, and for workers to upgrade their skills, which is like a 'marathon without a finishing line'.
The Government, on its part, will spend $5.5 billion over five years to boost productivity, as well as pay special attention to improving the lives of low-wage workers, he added.
Turning to the issue of wages, Mr Lee noted that many companies are restoring wages and work-hours that were cut during the downturn, while others are awarding bonuses and pay increments.
Giving them a pat on the back, he said: 'These companies have remembered the sacrifices made by workers during the crisis. Their actions are strengthening the trust between workers and employers.
'They should work with the unions to look beyond the immediate optimism, build up variable bonuses and structure their wage systems to be sustainable and flexible.'
But analysts like Citigroup economist Kit Wei Zheng say the good showing in the job market would likely contribute to higher wages this year.
They were commenting on preliminary first-quarter employment data released yesterday by the Manpower Ministry.
The job market has become hungrier, with fewer residents - Singaporeans and permanent residents - staying unemployed.
The resident jobless rate hit a two-year low of 3.2 per cent in March, a dip from 3.3 per cent in December. The overall rate, which includes foreigners, was 2.2 per cent in March.
It could go lower, said CIMB economist Song Seng Wun who expects a pick-up in the pace of hiring to push the rate below 2 per cent by year's end.
Layoffs and premature termination of workers' contracts also eased to 2,100 from 2,200 in the previous quarter.
But there was one small blip: Job creation fell to 34,000 from 37,500 in the previous quarter.
The analysts note the job growth did not quite match the staggering economic growth in the first quarter.
One reason is that construction shed jobs for the first time in five years: 800 jobs were gone with the completion of projects.
Manufacturing added 3,400 workers. But the bulk of the gains continued to be in services, which added 31,200 jobs compared to 31,500 in the previous quarter.
Manpower Minister Gan Kim Yong, commenting on the data, said job creation would continue for the rest of the year and urged employers to keep sending workers for training.
'This will place them and their employees in a better position to capitalise on the opportunities that come with the recovery,' he said in a statement.
Source: Straits Times, 1 May 2010