Friday, 21 August 2015

Short-term help for SMEs facing labour woes: Lean Enterprise Development (LED) Scheme

By Toh Yong Chuan, Manpower Correspondent and Olivia Ho, The Straits Times, 20 Aug 2015

There is some relief in store for small and medium-sized enterprises (SMEs) undergoing restructuring. They will be given short-term help in hiring and retaining foreign workers.

The Ministry of Manpower (MOM) will ease up on how it applies the foreign workers quota and ratios to these businesses.

Some employers will be allowed to hold on to more of their better- skilled foreign workers temporarily, even as their overall foreign workforce numbers are cut.

Others will be allowed to hire foreign experts - who will not count towards the foreign workers quota - to train local workers.

This assistance will last for up to three years under the Lean Enterprise Development (LED) Scheme announced yesterday by Manpower Minister Lim Swee Say.

The flexibility will help SMEs boost productivity by cutting their foreign workforce through innovation and automation, Mr Lim told 120 SME bosses and associations at a meeting.

Companies must apply to the MOM to join the two-year pilot scheme, which starts in October.

Applications will be considered on a case-by-case basis and those backed by unions and industry associations will be given priority.

Mr Lim stressed that there is no change in the Government's foreign worker policies.

"This scheme is not about helping companies get more foreign workers," said Mr Lim. "If they think that way, all their proposals will be rejected. There is no surge in the (foreign workers) quota... we are not changing the ratio."

The MOM also announced a new multi-agency LED taskforce yesterday led by the Singapore Workforce Development Agency and Spring Singapore. It will coordinate the implementation of various government schemes to help SMEs.

Unions and employers welcomed both moves.

"It is a departure from the past," said Association of Small and Medium Enterprises president Kurt Wee. "They are going to take a hands-on, operative approach in looking at how to help companies."

Mr Thomas Fernandez, chief executive of pest control agency PestBusters, said the LED scheme will give his company room to reduce headcount, which it plans to do by using drones to inspect gutters.

The National Trades Union Congress (NTUC) said the MOM has to be selective in picking companies for the scheme. NTUC's assistant secretary-general Yeo Guat Kwang said: "MOM should ensure that this transitional and targeted flexibility... is offered only to help firms make the transformation and not as a permanent arrangement."

Labour woes' easing a boon for SMEs
Firms to use skilled foreign workers in short term as they train locals and get more to join
By Olivia Ho, The Straits Times, 24 Aug 2015

A new scheme targeting small and medium-sized enterprises (SMEs) comes as a boon for companies and business associations whose restructuring plans were hobbled by the foreign worker quota.

The Lean Enterprise Development (LED) scheme, announced last Wednesday by Manpower Minister Lim Swee Say, will give some businesses short-term help in hiring and retaining foreign workers by easing up on how the Ministry of Manpower (MOM) applies the foreign worker quota and ratios.

This new flexibility will benefit SMEs such as laundry business Systematic Laundry & Healthcare Services, which could be allowed to hold on to more of their better- skilled foreign workers for now, even as they reduce their overall foreign worker headcount.

Its chief executive Chan Tai Pang said he already has plans for a "laundry ATM" in condominiums, where customers can deposit their soiled laundry to be tracked via radio frequency identification technology, instead of needing his workers to go door to door to collect it.

Said Mr Chan of the LED scheme: "We can keep some S-Pass workers in technical support or management roles to provide training to local staff, whom we hope to attract once we can make the job less taxing."

Business associations are also keen to have their members take advantage of the scheme.

Mr Ernie Koh, president of the Singapore Furniture Industries Council (SFIC), said the scheme will help its Creative Craftsman programme. Started last February to train more locals in carpentry, it had struggled initially to find local certified trainers.

Said Mr Koh: "I was even going to ask my 83-year-old semi-retired father to do the training, because I couldn't get anyone else."

Under LED, he said, SFIC could bring in skilled foreign craftsmen to train locals, without having them count towards the firms' foreign workers quota .

Singapore National Employers Federation (SNEF) executive director Koh Juan Kiat recommended that SMEs band together to put up proposals tackling industry-wide problems. SNEF will be organising forums for like-minded SMEs to get in touch."The scheme is not for one company to make a change within itself. Rather, it should be several companies coming up with a horizontal kind of solution that can transform the sector."

For some, however, the new scheme is not the answer.

Mr Jeffrey Tan, managing director of housekeeping firm Nafa System Services, said that to secure urgent contracts, "it would be good if MOM could (also) consider letting us engage interim foreign workers for three to six months, and in turn we make a commitment that we will replace them down the road with locals".

"Otherwise, we are dead in the water and cannot move."

* Over 1,400 firms tap govt scheme to stay lean
Lean Enterprise Development Scheme has helped SMEs reduce workforce, improve productivity
By Joanna Seow, The Straits Times, 4 Nov 2016

More than 1,400 companies have started projects under a government scheme that helps small and medium-sized enterprises (SMEs) to be leaner on labour and more productive in their use of other resources as well.

The year-old Lean Enterprise Development (LED) Scheme has helped SMEs like restaurant chain The Soup Spoon to automate and cut workers at its outlets by 25 per cent.

At manufacturing firm Onn Wah Tech, automation has cut down the number of workers for a pin-insertion process from four to one. Also, the process is now two times faster.

The number of companies that have gone leaner and their achievements were highlighted by Manpower Minister Lim Swee Say yesterday when he gave an update on the scheme launched in October last year as a two-year pilot project.

He was speaking to more than 600 employers at a symposium, at which about a dozen organisations shared their success stories.

LED provides one-stop support for SMEs - which form the bulk of firms and employ about 70 per cent of the 3.7 million workers here - that need money for upgrading.

It also gives them the room to employ foreigners as an interim measure while they raise the quality of jobs or train Singaporeans for new and improved jobs. But fewer than half of the 1,400 companies needed to use this provision while implementing their projects, Minister of State for Manpower Teo Ser Luck told reporters at the symposium.

The need for such foreigners for a project is reviewed yearly and their numbers can be renewed for up to three years. But whether other companies can apply for these extra workers after the two-year pilot period will be decided later, he said.

In the economic slowdown coupled with the tepid labour market, Mr Teo said firms need to hasten restructuring."There's a lot that companies can do in different ways to keep their manpower lean through automation, through process redesign, job redesign. We're hoping that we can introduce many other different schemes to help them," he added, without elaborating.

The symposium was organised by the LED task force - the National Trades Union Congress and government agencies - and the Singapore Manufacturing Federation.

Mr Lim, in his speech, spoke of the urgency of getting SMEs to transform. The local workforce may stagnate in the next decade, amid an ageing population and a low birth rate, he said. "With foreign manpower growing much slower too, our challenge is to ensure this sharp drop in our total workforce growth will not become the bottleneck in the future growth of our economy and SMEs."

In helping the SMEs, the task force found four types of firms.

These include the unaware and the unwilling to change, the willing who do not know how, and those who can band together to implement larger-scale projects for the whole industry.

The Soup Spoon's managing director Andrew Chan sees his goal to move up the food chain - from selling food in Singapore to manufacturing food to sell overseas - resulting in better-quality jobs. "We can move from lower-skill assembly jobs to more roles in sales, research and development, food technology, logistics supervision and quality assurance," he said.

"There is also more scope for training, exposure and advancement for the staff."

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