Singapore port to cut jobs

The state-owned PSA company is cutting 800 jobs, representing 14% of its workforce.

Tariffs in Singapore are higher than neighbouring ports and the move is a part of the government's general restructuring in a bid to make the country more competitive.

"This tells us that the government is anxious to keep costs under control," Sanjay Mathur at UBS Warburg told the BBC's World Business Report. The island's four port terminals serve 250 different shipping lines and is second only to Hong Kong.

It is the first time in more than 20 years that any staff have been laid off.

The cuts come at a difficult time for workers as unemployment has doubled since March 2001 and risen to 4.2% of the workforce.

Local competition

Malaysia's port Tanjung Pelepas has successfully captured some of the PSA's main customers in the last couple of years by offering cheaper tariffs.

Costs in Malaysia can be up to 50% cheaper.

The situation in the port has had little impact on the country's export because Singapore is a major trans-shipment area.

"Singapore is a major entre-port centre so doesn't only handle exports," Mr Mathur said.

"The amount the port contributes to the gross domestic product figures is not very high, but the number of families dependent on people working there is significant," he added.