Most SMEs say they can’t send workers for skills training

SINGAPORE — Despite the Government’s clarion call for workers to upgrade their skills in order to stay relevant in the future economy, the vast majority of small and medium enterprises (SMEs) are finding it difficult to invest in skills training for their employees.

Citing obstacles such as having a lean workforce, which makes it hard for them to let workers take time off for training, and other more-pressing priorities, 85 per cent of the SMEs surveyed in an annual study said they are “hindered in their efforts to upgrade the skills of their workforce”.

In all, 2,513 companies took part in the latest SME Development Survey, which is into its 14th year. Among other findings, the survey — conducted by DP Information Group — found that a greater proportion of SMEs (7 per cent, compared with 2 per cent in 2014 and last year) were looking to downsize their operations, as part of efforts to manage costs under the current sluggish economic conditions.

DP Info chief operating officer Lincoln Teo said the upgrading of employees’ skills will be a major challenge for SMEs in the next few years. “Singapore is entering a slow growth period, and most SMEs are experiencing challenges growing their revenue while managing cost and improving productivity,” he said. “Implementing training and development strategies while keeping their employees focused on the business is a delicate balance … Many SMEs simply do not have the capacity to redeploy their employees into training as it will impact the day-to-day operations of their company.”

Mr Teo suggested that SMEs turn to “agile and technology-based training programmes such as scenario-based learning”.

Among the respondents who faced obstacles that prevented them from taking part in manpower development initiatives, half indicated that it was “difficult to commit employees for such initiatives due to a lean workforce”. Almost 40 per cent said they have “other priorities to focus resources and time on”. Among the various sectors, the manufacturing sector had the highest proportion (90 per cent) of firms that faced challenges in developing their workers’ skills. At the other end of the spectrum was the retail sector (74 per cent).

The survey also found that 82 per cent of the respondents were having problems hiring young staff. The top reasons cited were an inability to meet the expectations of these workers, and these employees also found that the work environment is not challenging.

Together, SMEs here employ about 70 per cent of the total local workforce. The survey showed that SMEs were mostly receptive to hiring professionals, managers, executives and technicians above the age of 40, thanks to the tight labour market and Government incentives and programmes.

Compared with surveys conducted in 2014 and last year, the proportion of companies looking at downsizing their operations has crept up, but Mr Teo noted that this could mean reducing office space or factory operating hours, and not necessarily shedding workers.

Singapore Business Federation chief executive officer Ho Meng Kit, who was also at a press briefing on the survey findings, added: “(One example is) you have restaurants with many branches, and (when) you find that the rental is high and you can’t get labour, you downsize. Another example is tenants who have more than one factory location, and they consolidate to save on rental and overheads.”

Nevertheless, in order to manage costs, most companies are looking to raise productivity, to source for cheaper supplies or raw materials and to reduce their overheads.

Mr Ho said he was concerned with the finding that 22 per cent of the respondents said they were facing financing-related challenges, an 8 percentage point increase from last year.

He added that the SBF would be “monitoring the situation closely to assess if current Government-backed loans for SMEs are sufficient” to support the sector, or whether more help is needed.