Minister of State Lim Swee Say told the launch of the Skills Redevelopment Programme that Singapore's problem lay with a "mismatch between job seekers and job supply."

There was an unavoidable demand for higher skilled people as the economy improved and Singapore had to minimise the mismatch in the market, he said.

Unemployment in Singapore was heading back towards the 4.3 percent reached at the end of 1998 following heavy retrenchment during the recession brought on by the regional financial crisis.

After dropping below three percent as the economy recovered in 1999, unemployment expanded to 3.4 percent in the first quarter this year despite continued growth.

"The threat we face is not simply the rise in unemployment, but structural unemployment ... it is an outcome of economic progress," Lim said.

"Structural unemployment will not only slow down economic growth, but also heighten social tension and weaken cohesion in the community," he said.

"We need to recognise that it is quite painful for workers to have to spend 3-4 hours each day on the road to take up jobs that pay them only a few hundred dollars a month.

"We need to train them and help them to upgrade so that they can take on better paying jobs."

The IDA has identified nine skills which the workforce should be equipped with, ranging from basic computer operation and office automation to e-commerce development and multimedia.

"We are targeting for 35 percent of the workforce to be infocomm-savvy by year 2003," IDA assistant chief executive (online development) Kaizad Heerjee said.