SMEs battle wage costs, curbs on labour

SMEs battle wage costs, curbs on labour

SINGAPORE - Wages remain the main overall cost challenge for small and medium-sized enterprises (SMEs) here, even though many have achieved productivity gains.

A new study, done between May and August, found that 72 per cent of firms cited manpower costs as hurting bottom lines.

That was an increase from last year, when 54 per cent cited manpower costs as a key worry in DP Information's survey.

In particular, more than half of the SMEs said they are being hit by stricter foreign manpower policies and higher levies.

These were among the key findings of a survey of about 2,600 SMEs conducted by DP Information Group, a credit and business information bureau.

Construction, information communications, services and manufacturing companies were affected the most by wage costs.

Many are also worried about rising oil prices, with 73 per cent of those polled flagging oil prices as a key concern.

The survey also found that of the 74 per cent achieving productivity gains, nearly half produced goods or delivered services quicker, 38 per cent streamlined their workflows, while 32 per cent made the best use of their manpower resources.

DP Information's managing director Chen Yew Nah observed that SMEs are responding to the Government's message to focus on productivity.

"What SMEs can do is invest in productivity, technology and brand and product development while they wait for trading conditions to improve," she said.

The survey found that about 27 per cent of respondents have applied for the Productivity and Innovation Credit (PIC) scheme, which gives tax deductions and cash grants for companies that invest in raising productivity, compared with 6 per cent last year.

Ms Chen said more can be done to engage smaller SMEs and those which have been in business for a longer time. They are less likely to track and measure productivity.

Last Tuesday, Deputy Prime Minister Tharman Shanmugaratnam said at an awards ceremony that about half of the small SMEs with a turnover of between $1 million and $10 million have claimed PIC benefits.

The take-up rate for smaller SMEs with a turnover of less than $1 million is much lower, at 17 per cent.

For local printing firm Winson Press, manpower and rental are the most problematic cost issues.

Chief executive Tan Jit Khoon said the higher levies on foreign workers are also an issue.

It has tapped on the PIC scheme for some of its training and technology spending, and is looking to transform its business model to also help individuals publish their own books.

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