PM Lee said he is confident that Singapore would overcome the economic challenge, but stressed the need to step back and see things in the long-term with regard to the economy.

In his National Day rally speech delivered in English this evening, he mentioned that the labour situation in Singapore has stabilised, with some companies starting to hire again.

He provided some optimism for the economy in the third quarter, but said "what lies beyond is not clear".

More job losses possible

He warned Singaporeans to be prepared for more job losses due to restructuring. He said companies were currently holding on to surplus workers, aided by government incentives like SPUR.

He stressed, however, that it is not known how long they can continue to do so, if their output continues to go down.

Need for workers to upgrade themselves

To transform the economy, PM Lee stressed the need for workers to upgrade themselves.

He said in his speech: "As we transform our economy workers will need to update and adapt themselves. The government is spending millions of dollars on programmes to help workers to do this, to upgrade within their jobs if they've lost jobs, to help them to become job-ready to learn new skills, to find new jobs.

"The facilities are all there. The programmes are there. Please take advantage of these opportunities if you're out of a job, even if you're in a job.

"Don't wait till you're unemployed. It may mean effort, it may mean a mindset change. But we have progammes even to help people to make this mindset change, to overcome the psychological hurdles, to rebuild their self-confidence, improve their interview skills & to give one another encourargement and moral support."

PM Lee also said in his speech that two continuing education and training (CET) campuses will be built at Paya Lebar and Jurong.

"Next to MRT stations, convenient for workers. And they will become one-stop shops for training and retraining, and job matching. And I think we will be able to get even more workers helped and trained. MOM will give you more of the details later on," said PM Lee.

This is part of the government's efforts to enhance training infrastructure and to continue training and retraining programmes.

Overall assessment

PM Lee noted that the resilience package introduced in Jan this year has been effective, with "no need for another prescription". He added that there would be another review on this at the end of the year.

Beyond this year, PM Lee said he expected Singapore's recovery to be a subdued one. However, he said Singapore can still grow by 'sharpening skills' and 'enlarging market share'.

He said signs of hope, or 'green shoots', can be seen in the economy at the moment - local companies are doing well overseas with new business areas, multi-national companies are still continuing to invest and workers are upgrading themselves.

In an excerpt from his speech, PM Lee said: "Because of the way we've responded comprehensively and decisively to the downturn, we can be confident of our future. It is a deep trough, but we are coping with it.

"It's taken quite long. It may take some time more. But eventually the global economy will turn around, and Asia will sustain its recovery. And by then, our new strategies, our new investments, our workers' upgrading will have taken effect. And we will be ready to pick up strongly again."