There was no other alternative for Singapore even if it means restructuring of the economy could lead to some retrenchment, Lee said late Sunday in his first May Day Rally speech since becoming premier in August.

"Our economy is at a turning point ... restructuring has to continue," Lee, 53, said, citing the rise of India and China as the main reasons why Singapore must persevere with efforts to become more lean and efficient.

"What we do in the next few years will profoundly affect Singapore's relevance to this new world.

"It is better for us to endure some short-term pain, so that in the long-term, we stay competitive, and can continue to create more jobs."

The restructing efforts undertaken in recent years are already yielding results for Singapore, Lee said.

Lost jobs in 2004 topped 10,000, the lowest level since the 1997 Asian financial crisis, while state-owned PSA Corp. has overtaken arch rival Hong Kong to be the number one port operator in the world during the first quarter, he said.

"Government welfare is not the answer to our problems," Lee said.

"Many countries have tried welfare... ultimately, these do not work," he said, citing France and Germany as examples.

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