Two ways to stimulate employment | Jorbb.com

Many economic studies have shown that university graduates who enter the workforce during recessions earn substantially less than those who start work when the economy is growing. Researchers Philip Oreopoulos, Till von Wachter and Andrew Heisz - of the University of Toronto, Columbia University and Statistics Canada, respectively - studied Canadian university graduates between 1982 and 1999. Graduates entering the labour market during recessions started with lower earnings and caught up only after eight to 10 years.

In Singapore, the experience of young people graduating during recessions has been relatively easier because of rapid economic growth. A friend who graduated in accountancy during the 1985 recession, for example, remarked that her cohort was set back initially, with the luckiest getting jobs at a mere $600 a month. But they quickly caught up when the economy recovered. Today, many are well-paid chief financial officers.

However, the picture may not be quite so rosy in the future. As Singapore's economy matures, its long-term rate of economic growth will decline. From 1980 to 2007, Singapore's average growth rate was 7 per cent per annum. The official forecast is for future growth rates to average from 3 to 5 per cent per annum.

With lower overall economic growth, the prospects for graduating university and polytechnic students are distinctly worrying - and not just in the short term.

What should we do? Our greatest challenge now is to provide jobs. Policymakers and economists all over the world are debating how to stave off recession and provide employment: Would lower interest rates do the trick or bank guarantees? Spending on infrastructure or tax cuts?

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