The Manpower Ministry said the nation's jobless woes have now eased back to levels last seen before the Severe Acute Respiratory Syndrome (SARS) outbreak, which decimated the local economy in the first half of last year.

Deputy Prime Minister Lee Hsien Loong said the unemployment rate, which private sector economists had projected would remain above 5.0 percent for much of this year, was set to fall further in the coming months.

The Manpower Ministry said 11,500 new jobs were created in the final three months of 2003, 8000 of which were in the services sector that was particularly hard hit by SARS and the ensuing fall in tourist arrivals.

"The drop in unemployment reflects a stronger-than-expected pickup in the job market following a sustained recovery in the economy in both services and manufacturing industries," the ministry said in a statement.

"The tourist sector has turned the corner with the hotel occupancy rate back to the pre-SARS level.

"This coupled with the clustering of the (Christmas and Lunar New Year) festivities and improving sentiment have led to strong recruitment in the domestic sector, particularly in hotels, restaurants and retail."

Singapore's unemployment rate ballooned to a 17-year high of 5.5 percent as of the end of September last year and private economists had predicted an improvement in the jobless numbers would lag the rebound in the rest of the economy by up to 12 months.

"This was totally unexpected. I know the economy picked up but I don't think anybody expected the unemployment numbers to bounce back as much as they have done," Paul Schmyck, a Singapore analyst with market intelligence firm IDEAglobal, told AFP.

"The most optimistic forecasts were targetting 4.5 percent in December 2004 (but) we have hit 4.5 percent in December 2003."

Schmyck said Singapore's unemployment rate would drop to about 4.0 percent later this year as long as there were no further setbacks such as a second SARS outbreak or an escalation of the current Asian bird flu crisis.

Deputy Premier Lee pointed to the official projections of 3.0-5.0 percent economic growth for this year, following the modest 0.8 percent expansion in 2003, to back his assertion that unemployment numbers would continue to fall.

However, Lee also cast a shadow over the optimistic data by warning the nation had to embrace major wage reforms over the next 12 months or it would lose its international competitiveness.

"Recovery does not reduce the importance and urgency of wage restructuring," Lee told a conference on labour reforms.

"Any delay will harm the interests of both employers and workers.

"We should not wait for another crisis before making further progress on wage reform. Downturns are an inevitable fact of life. When the next one comes, we must be ready to ride through it."

Lee's comments came a day after a government-appointed taskforce called for a minimum 30 percent of employees' salaries to be made "flexible" so they can be cut during times of economic hardship or increased competition.

Lee said most of Asia, not just China and India, is now starting to match Singapore in many areas of economic competitiveness and one of the most essential tools to push the nation ahead again is wage reform.

"Our companies must be lean, efficient and dynamic, with every bit of fat trimmed off," he said, adding he wanted at least half the workforce in large companies to be under a flexible wage system by January next year.
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