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Asia-PacificFebruary 3 2004

Singaporean solution is best defence against unemployment

At a time when growth does not necessarily mean more jobs, governments must take a proactive stance to keep people in work.
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When global unemployment hits a record high of 186 million people even as growth is picking up, one of the world’s most intractable problems is thrown into sharp relief.

The latest report by the International Labour Organisation (ILO) highlights, along with high unemployment in developing economies, the dilemma of developed economies. Many of them are experiencing a recovery in growth without a parallel jobs recovery. The US is at the forefront of this, as for the first time job creation substantially lags the economic upturn.

The problem is widespread, as Prime Minister Goh Chok Tong told The Banker (see page 29). He believes Singapore can generate growth of 3%-5% on a sustained basis but admits this will not generate the equivalent employment growth because much of it will come from high-value investments. The Singaporean solution is for the government to be involved in training and retraining people and in trying to change their attitudes, including the acceptance of wage cuts.

Worrying high

Singapore is a microcosm of the developed world, one where consensus reigns. Its unique circumstances – 3.4 million Singaporeans living on 685 square kilometres with a GDP per capita of $37,333 – are impossible to duplicate. Unemployment of 4.5% may not seem much to European economies used to much larger structural unemployment, but for the Singaporeans this represents a worrying high.

Hong Kong, on the other hand, which has lost most of its manufacturing base to mainland China, has a different attitude. Its more free-wheeling version of capitalism means the government’s involvement in preparing its citizens for this brave new world is minimal.

The ILO report proves that something needs to be done and Singapore’s way seems to offer the best hope. The costs of doing little, in terms of social disruption and the burden on the working population, are due to increase with the minimal amount of government-sponsored training that is taking place in most developed countries.

More funds spent on targeted training for youth workers and retraining for the older workers is not a choice for industrialised economies; it is a necessity.

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Read more about:  Analysis & opinion , Asia-Pacific , Singapore