SMEs expect higher labour costs; Asme offers recommendations for Budget 2015

SINGAPORE'S small and medium enterprises (SMEs) are expecting higher manpower costs, the Business Sentiments Survey 2014 conducted by the Association of Small and Medium Enterprises (Asme) has revealed.

In the annual survey, 84.6 per cent of respondents cited that the cost of operation is likely to increase in the next six months, and 82.3 per cent cited manpower as the top contributing factor.

The survey, which was conducted in December last year, further highlighted that 13 per cent of SMEs have not utilised the enhanced Productivity and Innovation Credit (PIC) scheme and the Infocomm Technology (ICT) for Productivity and Growth programme, while 55.3 per cent of respondents said the requirement to pay upfront and be reimbursed later was the top deterrent of tapping government schemes.

For respondents' expectations for Budget 2015, both "initiatives to look for local staff and talent" and "initiatives to reduce rental costs" were equally important (58.3 per cent) to respondents, while 57.4 per cent of respondents also expressed the desire to see the introduction of more "initiatives to increase productivity".

In view of the uptake of government schemes, Asme suggested for the PIC scheme to be revised and fine-tuned, to encourage companies to move beyond the "hardware purchase" phase and, instead, evaluate and redesign their workflow and processes that drive productivity.

Asme also suggested for the PIC bonus be reinstated for expenditure on process redesign, software development, implementation and enhancements to encourage process change.

"Soft skills, soft processes and software development need stronger support from the government, as it will bring about greater growth in productivity, leading to the next lap of growth for our SMEs," Asme said.

Based on the survey findings, coupled with feedback from the annual ASME Forum - an initiative involving ITE students - Asme also suggested for the government to develop a structured framework or curriculum that allows SMEs to work with higher education learning institutes in providing certification (such as graduate diplomas) for students who have been employed by these companies for a certain duration.

In addition, Asme would like schools and institutions to recognise these certificates, distributing credits to students should they choose to further their studies.

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