CREATION OF NEW JOBS

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CREATION OF NEW JOBS: 15.

Mr Low Thia Khiang asked the Minister for Manpower how many jobs are needed to be created annually over the next 5 years to keep the residential unemployment rate stable.

Dr Ng Eng Hen: Mr Speaker, Sir, our local labour force will grow by around 36,000 people each year over the nextfive years. This islargely due to the new school leavers entering the labour force each year. This would be the net job growth required to keep the residential unemployment rate stable, all other things being equal.

Mr Low Thia Khiang (Hougang): Sir, what is the projection of the Ministry in terms of stable long-term unemployment rate? How many jobs need to be created in the long term in order to maintain the rate?

Dr Ng Eng Hen: Sir, as I have said, we have about 36,000 new entrants into the labour market every year. So this will be the number of jobs thatneed tobe created to keep our unemployment rate as it is. This translates to about 3%-5% of GDP growth, using historical norms. In the first half of this year, we created about 27,000 jobs and the new jobs will exceed the number of new labour entrants. So unemployment will fall somewhat towards the end of the year.

Mr Low Thia Khiang: rose ---

Mr Speaker: Mr Low, do catch my eye before you stand, please.

Mr Low Thia Khiang: Have I caught your eye, Sir?

Sir, is the Minister projecting that the residential unemployment rate in the next five years is going to remain the same, 4.5%or 5%? Or is he saying that there will be a reduction in the unemployment

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rate? What would bea stable unemployment rate that he would be satisfied with?

Dr Ng Eng Hen: Sir, unemployment is a function of many things. But for Singaporeans, the most important question in their minds is: can our economy grow and create jobs? That is the fundamental issue. Ifwe cannot, then there are not enough jobs to go round. It is as simple as that. And it is very clear from the last five years that this is being demonstrated when the economy slumped. We could do almost everything and we did. And when there were external challenges like SARS or terrorism, we did not have growth, we did not have jobs. We did not do that much structural changes. We took hard decisions in terms of CPF, wage cuts, and this year, the economy grew and we are creating jobs. So I think in terms of job creation, our fundamentals are there. But the greater challenge for many of our Singaporean workers is that they can be left behind because their skills and aptitudes may not be quite consistent with the type of jobs being created. In other words, our new economic structure creates jobs. We must retrain and help Singaporeans adapt. If we can do that and can meet the challenge, then unemployment will go down.

Mr Low Thia Khiang: Sir, the Minister has not answered my question as to what is the Ministry's projection of the residential unemployment rate in the next five years.

Dr Ng Eng Hen: Sir, the current unemployment rate is 4.5%. What the unemployment rate will be, going forward, as I have said, is a function of many things. One is a function of growth because, ultimately, it is growth that creates jobs. And ifwe have another situation and there is no growth and there are, in fact, job losses, then our

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unemployment rate will go up. But if our economy does well, as it has been doing this year, andwe create jobs, our unemployment rate should go down if workers have the skills to go into the jobs. If our economy continues to grow, as forecast by MTI this year, we expect the unemployment rate to go down to 4%.

How it does after that, again itdepends on how the economy grows and how our workers adapt to the challenges.

So, I think it is less useful to make forecast. It is really more impactful to get our workers ready for the jobs that will come when our economy grows.

Mr Low Thia Khiang: Does the Ministry not have a forecast of the projection of unemployment rate, given the circumstances and projections of economic growth in the next five years?

Dr Ng Eng Hen: Sir, our forecast is, if the economy grows by 3-5% per year, we will generate about 36,000 jobs to absorb the entrants. In other words, all things being equal, if we continue to grow 3-5% for the next five years, depending on what the unemployment rate at the end of the year is, it will be around 4%. If we grow more than 5%, the unemployment rate will fall. If we grow less, the unemployment rate will rise.

Mr Steve Chia Kiah Hong: **** Sir, as the economy grows, will the unemployment rate actually go up as more of those who are unemployed, who have given up looking for jobs, return back to the job market to seek for new jobs?

Dr Ng Eng Hen: Yes.