By Aaron Low, Political Correspondent

THE ongoing global economic slump has prompted many manufacturers to downsize their operations here or move out of Singapore completely.

Unionists worry that once these jobs are lost to Singapore, they will be gone forever. They were commenting on labour chief Lim Swee Say's warning that retrenchments are likely to climb.

Speaking at the labour movement's National Day observance ceremony yesterday, he said several unionised companies told the NTUC that they will retrench over 1,500 workers later this year.

This is because the companies do not see a pick-up in global demand and many do not want to hold on to spare capacity.

Hence, they are moving to countries such as Malaysia, China and India where it is cheaper to operate, he said.

A decline in the jobs situation could lead to what Mr Lim described as a 'double-dip' - a W-shaped economic recovery.

Following a buoyant employment situation last year, the first three months of this year saw more than 10,000 laid off.

Although preliminary second-quarter figures show this has since eased to 4,800, Mr Lim said this did not mean Singapore and the global economy were back on a path to growth. The outlook for the second half of the year remains uncertain, and layoffs were on the horizon.

NTUC deputy secretary-general Halimah Yacob said many of the job losses will arise because companies are hiving off their less profitable production lines.

'Because of the global slump they are struggling to cope with the low demand for their goods,' she said.

'So they may decide to move some of their operations to cheaper countries.'

The general manager of a manufacturing company dealing in precision engineering said it was getting increasingly difficult to do business here because of the higher labour and land costs.

The manager, who spoke to The Straits Times on condition of anonymity, said moving operations to countries such as Malaysia and Vietnam could save his company 20 to 30 per cent in costs.

'Productivity here is higher by 5 to 10 per cent. But the cost pressures are just too much,' he said. The company is likely to relocate much of its work to Malaysia in the next few years - and shed about 20 per cent of its staff here.

Manufacturing has been the economy's worst performer this past year.

Since the end of last year, manufacturing shed 46,700 jobs, even as the economy's two other key engines - services and construction - continued to add jobs.

Unionists worry that jobs such as production line staff, factory operators and machine technicians will become extinct here once they exit the economy.

United Workers of Electronic and Electrical Industries general secretary Cyrille Tan said these jobs will not be recreated when the economy turns around.

This is because the countries where operations are being shifted to are cheaper and also offer better-educated workers.

Metal Industries Workers' Union general secretary Tan Chai Kun agrees that the outlook on retrenchments is not rosy.

He worries about a flood of layoffs once the $4.5 billion Jobs Credit scheme ends. Under the scheme, the Government pays a portion of a company's wage costs for resident employees.

The scheme and the Skills Programme for Upgrading and Resilience are credited for reining in unemployment as it helps bosses keep employees on the payroll.

The fourth and final Jobs Credit payout will be made on Dec 31.

Said Mr Tan: 'Once this support goes, I worry if workers will be retrenched. I hope the scheme can be extended to save jobs.'

This article was first published in The Straits Times.