SMEs affected by rising labour costs and foreign worker restrictions

HRM 28 Nov 2012

Rising labour costs are hitting small and medium enterprises (SMEs) hard, but most of these firms are failing to counter its impact by raising productivity.

In the SME Development Survey by DP Information Group, the majority of SMEs (72%) said that their profits last year were most deeply eroded by labour costs.

Those in the construction sector were most affected by rising manpower costs with 87% of them agreeing that it is the main reason for the eroding profits. This is followed by the information and communication at 79%, services sector at 77% and manufacturing sectors at 75%.

The survey also revealed that more than half of SMEs (56%) felt that the manpower policies on foreign workers, such as high levies and reduced quotas, were a problem and had impacted the business environment.

Nine in 10 firms felt that the policies resulted in higher manpower costs for them. A smaller number of firms also raised the issue of a manpower crunch for critical roles.

Less than one-third of firms said would look into raising productivity to manage rising costs. The adoption of the Productivity and Innovation Credit (PIC) remained low at 27% in 2012. However, this is a big jump from the six per cent which applied for the scheme in 2011.



Leave your comment
Start a new discussion

HRM Asia forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Post a Comment
HRM Asia welcomes your contribution. Your IP address is recorded in the event of a complaint.
Name *
Email *
(required, but will not display)
Comment *
Please enter in the numbers in the box left.
You are about to submit your comment. Is it:
  • Professional
  • In your own name or pseudonym, not impersonating someone else
  • Free from rude language
  • Free from advertising
  • If you prefer not to post but are still keen to get your viewpoint across, you can always e-mail the editor.
  • 01 Oct | Profile Search & Selection | Singapore
    30 Sep | DN & Associates Executive Search | Singapore
    27 Sep | Kerry Consulting | Not Specified
    MSD: Building a case for sustainable leadership development
    Lisa Yeo, Managing Director, Singapore, MSD, shares how organisations should carefully utilise resources so as not to deprive the next generation of future leaders
    UBS: Journey towards becoming Employer of Choice
    Gamification and story-telling at Sabre Holdings
    TTSH: HR leading the health drive
    Performance Leadership Pte Ltd | info@performance.sg
    Lunch, Learn and Bond with your teams, all within 1 hour! Choose from a variety of light-hearted, interesting or thought-provoking topics that appeal ...
    Performance Recognition Pte Ltd | info@performance.sg
    A monthly business incubator where leaders grow their skills, exchange ideas and share best practices.
    Glides Consulting Partners Pte Ltd | lizk@glidespartners.com
    Achieving Key Organizational Results Through Greater Individual and Organizational Accountability