15 January 2013
Labour costs top SME concern
Magdalen Ng

Poll finding calls for Budget to address labour market

NEARLY nine out of 10 small and medium-sized enterprises (SMEs) expect manpower costs to be the chief concern in the year ahead, a survey has found.

Their concerns add to a growing call for this year's Budget - to be unveiled on Feb 25 - to address the tight labour market.

The survey of 213 businesses last month by the Association of Small and Medium Enterprises (Asme) found that 87.7 per cent expected the cost of operations to go up in the coming six months.

Of those, 88.4 per cent attribute manpower cost as the main contributor.

While 51.7 per cent still expect turnover to rise in the same time period, 68.8 per cent of those polled hope that Budget 2013 will have more incentives to help them recruit local staff and talents.

Also, 87.9 per cent of SMEs reported a rise in the cost of operations last year, mainly attributed to manpower costs.

The next main reason would be rental increases, where 70.5 per cent of businesses surveyed reported price increases in recent rental agreements.

Also, nearly half of the businesses surveyed said foreign worker levies will contribute to their rising costs.

Asme president Chan Chong Beng said the association is exploring opportunities to link businesses to the alternative workforce, including former offenders and back-to-work mothers.

Nearly half of the SMEs said their key strategy is to expand to overseas markets, while about two-thirds are looking to expand or relocate to neighbouring countries in South-east Asia.

About 60 per cent of SMEs would like to see more incentives for companies to expand overseas in this year's Budget.

Mr Chan said: "The level of interest and inquiries on the Iskandar development region (in Malaysia) are rather high, but many SMEs are still apprehensive about the region.

"With a one-stop centre, Asme will source for properties, paying special attention to the quality of development amenities, legalities, infrastructure and security."

Another item on the SMEs' wish list for Budget 2013 is greater initiatives to increase productivity, and for the extension of the Productivity and Innovation Credit (PIC) scheme beyond 2015.

Asme also proposed that the qualifying expenditure for the PIC scheme be raised from the current $100,000 to $200,000, and for the cash payout to be increased from 60 per cent to 80 per cent.

Mr Chan noted that this would help SMEs speed up productivity improvements and help them find alternative solutions to cope with the challenges.

Mr Benjamin Lim , managing director of interior services firm iwa Design, said he has been unable to hire more carpenters due to the foreign worker quota that kicked in this year.

"For SMEs like mine, we depend a lot on foreign labour as we can't find locals coming forward to work in our trade. If it were possible, I can employ up to 60 carpenters. These days, overhead costs are up, but we are unable to hire enough people, how do we remain competitive?"

He added that he will have to seriously consider whether to remain in Singapore, or to move his major operations overseas.

- Source: The Straits Times