PARENTS have welcomed the larger-than-expected increase in university places announced by Prime Minister Lee Hsien Loong.

But economists and recruitment experts said the new courses must be rigorous and give youngsters an extra edge, otherwise Singapore could end up with unemployed graduates if recession hits.

PM Lee surprised many parents on Sunday by announcing that 16,000 undergraduate places will be available annually by 2020, up from 13,000 now.

He said the increase - which is bigger than in recent years - will be achieved by expanding the programmes run by the Singapore Institute of Technology and SIM University (UniSIM).

Parent Alicia Tan welcomed the move. The 39-year-old office manager had been facing the prospect of paying for her daughter to study business in Australia due to stiff competition for university places here. "I expected a small increase, not the 3,000 that PM announced," she said.

But Mr David Leong, managing director of human resources firm People Worldwide Consulting, said the higher number of places needs to be matched by an increase in jobs for those leaving university. "The Government must ensure the economy is healthy and that more graduate-level jobs are created in a range of fields."

Mr Leong welcomed the announcement that the two institutions providing the extra places will have a more hands-on, practice-based approach than the other four universities and take more students from polytechnics.

"We can't have more of the same type of graduates," he said.

He added that many employers appreciate those who come through the poly route. "They are more hands-on, practical and ready to roll up their sleeves and get the job done. The universities must build on these qualities."

Labour economist Randolph Tan from UniSIM said the Government must tread carefully. "However dynamic the economy, at the end of the day Singapore is a small economy. Even the large economies like the US are faced with graduate unemployment."

He agreed with the plan for the new programmes to produce a different breed of graduates, adding: "They must be able to switch to related careers or even go on to new ones. And they must be able to head overseas if the opportunities here dry up."

However, National University of Singapore economist Shandre Thangavelu pointed out that the evidence showed educated workers are able to ride business cycles better than unskilled ones. They are also able to secure better-quality and high-paying jobs.

"Thus, increasing the opportunity for Singaporeans to acquire education and life-long education is in the right direction," he said.

PM Lee's announcement was a surprise as each time the Government has raised the university cohort participation rate over the past decade, it has usually been by about 5 percentage points. This time, it is rising by twice that figure, from less than 30 per cent now to 40 per cent by 2020.

The Singapore Institute of Technology, which offers niche degree programmes in partnership with overseas universities, will increase its yearly intake beyond the projected 2,000 in 2015, and offer its own degrees.

UniSIM, which provides part-time degrees for working adults, will start running full-time programmes but stay a private university.