Manpower challenges limiting local SME growth

Shortage of labour and economic restructuring are leading to moderate expectations in growth for small and medium enterprises (SMEs) in Singapore.

This was the key finding of the latest SBF-DP SME Index, jointly conducted by the Singapore Business Federation and DP Information Group.

According to the report, the overall SME index for this quarter rose by 0.5 points to 54.9.

While a score above 50 indicates that SMEs have a positive outlook for their business prospects for the next six months, the significantly small change in index signified “dampened” growth prospects for SMEs in the near future.

The report, which conducted 3,000 interviews with SME owners and managers, tracked five industry sectors, including business services, commerce/trading, construction/engineering, manufacturing, and transport/storage.

“Whilst three of the five tracked sectors reported a slightly improved outlook compared to the last quarter, commerce/trading (54.8) and business services (54.8) indicated a slight dampening in outlook for the next six months,” the report stated.

Continued manpower constraints faced by SMEs was cited as a key factor contributing to the less robust growth momentum.

While overall turnover expectation improved by 0.93% from last quarter, the report highlighted the latest round of increased foreign workers levies, scheduled to kick in from July, will further constrain firms’ ability to take on new projects.

“Overcoming the manpower challenge with a transformational shift in mindset is the key to SMEs’ future growth,” Chen Yew Nah, managing director of DP Info, said.

“Tightening labour constraints continuously dog SMEs with a less than robust expected growth, hampering their capacity to actively grow their top lines amidst expansion opportunities.”

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