Productivity efforts have 'limited impact'

Many SMEs still struggling despite turning to automation and training to help boost business, SCCCI survey shows
By Chia Yan Min, The Straits Times, 22 Sep 2015

Small and medium-sized enterprises (SMEs) have largely focused on automation and training in their efforts to become more productive, according to the findings of an annual survey.

But the impact of these efforts on productivity levels across the economy has been limited and more can still be done to help SMEs transform, said the Singapore Chinese Chamber of Commerce and Industry (SCCCI), which did the survey.

The business chamber, which polled 756 firms across various sectors from May to July, also found that business sentiment is down and firms are still struggling with rising costs, the manpower shortage and flagging competitiveness.

Salaries and rentals contribute the most to rising business costs, the poll found. These were followed by compliance costs and government administration fees.

Among firms which have implemented productivity-improving measures, 50.9 per cent adopted industrial automation or IT solutions.

Just 16.6 per cent opted to undertake higher-value-added activities, and 25.4 per cent embarked on efforts to optimise their business and management models.

SMEs need more guidance and help with these activities, the SCCCI said.

Companies were also surveyed on the type of workers they wish to hire - university graduates, Institute of Technical Education and polytechnic graduates or rank- and-file workers.

The majority of companies - 89 per cent - said they were looking for rank-and-file workers.

The SCCCI has submitted a series of recommendations to the Government in line with the survey results.

They include having SMEs - including those in traditional industries not identified as key growth sectors - continue to receive help in transforming and becoming more productive.

The chamber also reiterated earlier suggestions that the Government appoint a dedicated minister to oversee the SME sector or streamline agencies which deal with SMEs.

The SCCCI is also calling for a committee to look into major business-cost contributors such as rental, manpower, utilities, transport costs, and government fees and charges.

The chamber will continue to work with trade associations to develop their industry plans and productivity programmes, and leverage on the SkillsFuture programme to help SMEs upgrade, transform and address their manpower challenges, said president Thomas Chua.