SINGAPORE - The Government appears to have won only half the battle in encouraging businesses to depend less on foreign labour and boost their productivity, going by the results of a new survey.
About 2,700 small and medium-sized enterprises (SMEs) interviewed by DP Information Group said they would hire more locals in the next few years, largely due to curbs on foreign workers.
But the higher wage costs are slowing their growth and increasing operational woes, forcing many to put off productivity efforts.
Currently 74 per cent of the SMEs surveyed hire at least one foreign worker.
But this figure is projected to drop to just 35 per cent in three year. This means that, by 2016, two thirds of SMEs will have an all-local workforce. SMEs are Singapore's biggest employers.
But nearly half of the businesses surveyed expect no discernible growth this year, and 42 per cent do not plan to improve productivity within the next 12 months.
Ms Chen Yew Nah, managing director of DP Information, said companies are still grappling with the rapid changes in manpower policy.
"Singapore SMEs want to replace foreign workers with locals, but it is not an easy thing to do," she said. "The cost of employing a local is rising as larger companies with deeper pockets offer wages and benefits that smaller companies cannot match."
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