Firefighting SMEs ignore productivity
BUSINESSES here are putting the Government's holy grail of higher productivity on the backburner because of a lack of manpower and increasing costs.
These were the key reasons cited by business groups as to why 42 per cent of 2,708 small and medium-sized enterprises said they are not improving their productivity this year, in a recent poll by DP Information Group.
It was the first time the group posed this question in 11 years of conducting the annual survey.
Mr Kurt Wee, vice-president of the Association of Small and Medium Enterprises, said SMEs could be reluctant to make new investments when they "don't have the manpower to handle the flow".
"You can upgrade in capacity, but if you don't have the manpower to service the market, then it's not going to be of much use," he said.
Mr Wee also said that some SMEs may feel that efforts to raise productivity "do not justify the cost", especially if the scale or volume of turnover is not substantial.
Still, he added that some SMEs may have already embarked on some level of productivity upgrading in their businesses or may do so in the future.
Singapore Business Federation chief executive Ho Meng Kit said that, as a result of tight manpower constraints and escalating business costs, many SMEs have been caught in a "day-to-day 'firefighting' mode".
He said: "They have little bandwidth left to implement productivity improvements and plan for business expansion overseas."
He added that this has resulted in lower turnover and profitability.
This may also explain why 44 per cent of SMEs surveyed this year said they expect no discernible growth, compared to 27 per cent last year.
The chief reason given by SMEs that they would not up productivity this year was that they "did not see a need" for it.
It was mostly businesses in the wholesale and services sectors which said so.
Other reasons given was a lack of knowledge on how to implement productivity-improvement activities and a lack of resources.
Nearly nine in 10 respondents said they face obstacles in improving productivity.
The main obstacles were that employees lack the right mindset and a lack of the right skills.
The Government is now looking to address this.
Ms Choy Sauw Kook, assistant chief executive of Spring Singapore, said her agency is "now intensifying efforts to educate them on the 'how-tos' of implementing productivity measures."