The unemployment rate in Singapore is much lower than that in other developed countries, but it is expected to increase, Prime Minister Lee Hsien Loong said yesterday.

Addressing over 1,500 union leaders and guests at the May Day Rally, he outlined how pressures faced by developed economies are being felt here too.

The unemployment rate in March was 2.3 per cent, up from 2.2 per cent in December.

"In other developed countries, typically, the unemployment rate is between 5 and 10 per cent," he said.

"Our unemployment rate will gradually tend to creep up."

"We are feeling the same pressures as the other developed countries," Mr Lee added. "The industries have to continue restructuring, our workforce is getting older. Older workers who lose jobs tend to take longer to find new jobs and to get back into the workforce."

Even as Singaporeans have to understand this trend, at the same time, "we have to work hard to resist it, to keep our workers in jobs".

Mr Lee noted that Singapore is in a situation where youth unemployment, like adult unemployment, is low too. The average unemployment rate for local workers below 30 years old was 5 per cent last year, down from 5.1 per cent in 2015.

Many countries' youth unemployment rate shot up and stayed high after the 2009 global financial crisis, causing serious social problems.

Mr Lee said that in Singapore, graduates from the Institute of Technical Education, polytechnics and universities do not take long to find jobs because the schools prepare students for the job market and work with employers to tailor the curriculum to what the industries need.

"It did not happen by accident," he said. "We prepare the workers even before they graduate."

But while unemployment and youth unemployment are low, Mr Lee noted that the Singapore economy faces challenges.

While global growth is looking up, there are risks for the country, he said.

Meanwhile, Singapore's gross domestic product grew 2 per cent last year and the official growth forecast for this year is 1 per cent to 3 per cent. "There is a good chance growth this year will exceed last year's 2 per cent," said Mr Lee.

Growth is uneven and not every sector is doing well, but overall the economy is improving, he added.

"Restructuring is a continuing process and it is not a painless one," he pointed out.

The number of workers made redundant rose last year. "This year, even with better growth, we expect a steady trickle of redundancies."

He also noted that it is inevitable that some workers will be displaced as companies restructure - hence the need for unions, employers and the Government to work together to help create and find jobs for displaced as well as future workers.

Responding to his speech, union leader Jessie Yeo said external factors that affect employment are beyond workers' control.

But how companies treat workers when they restructure can be managed, said the executive secretary of the Metal Industries Workers' Union and Singapore Port Workers Union.

"Companies and unions can work together to help minimise the pain to workers during (economic) transition," she said. But employers must take the lead, she added.