In his annual message to mark Labour Day on Wednesday, the premier said the island's deepest recession in more than 30 years called for a "fundamental change in mindset."

Singaporeans "should not overcommit themselves on the expectation of a quick rebound in the labour situation," Goh said, adding that "excessive cost pressures may weaken the tentative recovery and lead to further job losses."

The unemployment rate is projected to rise to between 5.5 percent and 6.0 percent this year even as the economy is likely to grow between one percent and three percent this year, Goh said.

Singapore's economy shrank 2.0 percent in 2001 after nearly 10 percent growth in the previous year, putting the island-state into its worst recession since statehood in 1965.

"Although the initial signs are promising, the global economy is not out of the woods yet. Furthermore, the labour market tends to lag the overall economy by two to three quarters," Goh said.

Singapore's unemployment rate hit a 15-year high of 4.7 percent in December.

For the whole of 2001, the unemployment rate averaged 3.3 percent, above the 3.1 percent in the previous year but lower than 3.5 percent in 1999 after the Asian financial crisis.

Before the Asian crisis, Singaporeans enjoyed virtually full employment due to a booming economy and a domestic labour shortage.

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