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SMEs need help refocusing productivity efforts amid rising costs: SCCCI

SCCCI poll finds that fewer have adopted productivity measures this year, and offers three recommendations
Tuesday, September 22, 2015 - 05:50
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The fall in the number of firms embarking on the productivity drive this year suggests that small and medium-sized enterprises (SMEs) are not yet feeling the impact of productivity efforts, the Singapore Chinese Chamber of Commerce and Industry (SCCCI) has said, citing results from the latest SME Survey.

Singapore

THE fall in the number of firms embarking on the productivity drive this year suggests that small and medium-sized enterprises (SMEs) are not yet feeling the impact of productivity efforts, the Singapore Chinese Chamber of Commerce and Industry (SCCCI) has said, citing results from the latest SME Survey.

It has been found that 87.9 per cent of companies had adopted productivity measures this year, down from last year's 90.3 per cent.

The biggest fall was seen among small enterprises - a 6.3 percentage point drop from 92.1 per cent last year to 85.8 per cent this year.

The annual survey, done between May and July, polled 756 respondents; 96.2 per cent of them were SMEs, and 88 per cent, business owners and decision-makers.

SCCCI noted that productivity efforts have thus far focused on acquiring IT and automation equipment, but that these have yet to show results in overall level of productivity.

Fewer SMEs are optimising their business model; 25.4 per cent are doing so this year, down from 36.6 per cent last year.

Fewer are also undertaking higher value-added activities - 16.6 per cent this year, from 30.3 per cent a year ago, and fewer are engaging consultants to develop their frameworks (11.8 per cent this year, against 19.5 per cent last year).

SCCCI said these figures suggest that SMEs need more guidance and help in optimising their business model and in undertaking higher value-added activities.

The survey also found a limited awareness of the SkillsFuture programme, the national movement to give Singaporeans the opportunities to develop their fullest potential throughout life, regardless of their level of work experience or amount of education they have had: 56 per cent of the respondents were unaware of SkillsFuture; of the others who had heard of it, nearly half (48 per cent) said they were only slightly interested or not at all interested in it.

Asked about their hiring needs, 88.9 per cent of companies said they were looking for rank-and-file workers; fewer were interested in hiring ITE or polytechnic graduates (69.4 per cent), and even fewer (62.9 per cent), in university graduates.

SCCCI said in its report: "SMEs have a strong need for rank-and-file workers, indicating they still need help to transform their businesses to attract these workers, or need to change their processes to use fewer workers." It added that SkillsFuture could be a solution to SMEs' manpower challenges, but that many were still unaware of it or had not prepared themselves to benefit from it.

Separately, the SCCCI recommended that the government set up a committee to address rising business costs; 83 per cent of the companies said they were facing rising business costs, 52 per cent reported a decline in profit margins, up from 46 per cent last year.

In terms of business costs, staff costs and property costs were cited by 73.5 per cent and 53 per cent of respondents respectively as the major contributors to costs; a notable rise in survey respondents cited compliance costs as significant - 42 per cent, from 32.5 per cent a year ago.

SCCCI president Thomas Chua said: "Riding on the Trade Association Hub and with continued government support, the Chamber will work with trade associations to develop their industry plans, industry-level productivity programmes and leverage SkillsFuture to help SMEs upgrade, transform and address their manpower challenges."

The report recommended that the government:

  • Continue its commitment to SMEs, including those in industries not identified as growth sectors;
  • Appoint a dedicated minister to take care of SMEs or change how agencies are organised (including merging some); and
  • Set up a cost review committee to look at major cost contributors.