Do you need grants to increase employee productivity?
Small and medium enterprises (SMEs), with their sheer number and the huge workers they employ, are recognized as the backbone of the economy. They outnumber large enterprises on both aspects, making them significant contributors to economic activity and employment generation.
In ASEAN, over 96% of its enterprises are SMEs, which account for 50% to 85% of domestic employment. Moreover, their prevalence in non-urban areas and engagement with the youth through business participation add to their importance.
That is why governments try to create programs for SMEs to cater to their needs. However, most of these efforts still focus on providing access to finance and other funding support, thinking this remains their most pressing concern in order to grow. What SMEs badly need these days is more skilled workers.
The tight labour market is affecting the SMEs. Even with capital and resources to expand the business as well as a market demand for its products and services, the SME owner cannot grow the business without qualified and experienced people to fill the positions.
More than seeking business loans, SMEs are looking for ways to address the skilled labour shortage which seems to be getting worse every year. As businesses are driven to recruit personnel abroad who fit the skill sets they need or vie for a handful of skilled employees, they get to hire at higher salaries which increases manpower costs.
Higher business costs due to the labour crunch and inability to pursue expansion because of the shortage of skilled workers are hampering the growth of SMEs.
In Singapore, SMEs greatly feel the impact of the government policy tightening the inflow of foreign workers amid its economic restructuring, said Faizal Bin Yahya, Research Fellow at the Institute of Policy Studies of National University of Singapore, in the paper titled “Tightening Labour Market and SMEs”.
The study also noted that SMEs face difficulty not only in recruitment but also in retaining employees, citing the lack of standard approach to develop, execute and manage a diverse workforce and the need for a system of knowledge retention and transfer.
Addressing the skills gap, which entails making sure the youth acquire the necessary skills employers are looking for, calls for a long-term solution that can start with education. Business and academe forge partnerships to help improve the curriculum and better prepare students for the demands of the real world.
Skills training and other certificate programs are also being introduced to meet the current demands of the job market and narrow the gap. To bridge the gap, business are likewise encouraged to look more at apprenticeships to recruit the talents they need and develop a highly skilled workforce.
Better college funding can also help entice the youth to pursue a degree or gravitate towards the courses that would fill the skills shortage.
In the paper, Yahya cited the various assistance provided by the Singapore government to address the human capital needs, noting the Enhanced Training Support Scheme for SMEs as the most useful. This offers course fee funding and cash awards from the rank-and-file to the professionals, managers and executives to upgrade their skills and hone their expertise.
The Wage Credit Scheme has also been in place from 2013 to 2015, wherein government co-funds 40% of wage hikes for Singaporean employees with gross monthly income of S$4,000 over the three-year period. Thereafter, companies are expected to take on the subsidy, but the study said there is a concern if businesses can shoulder the portion of the remuneration when the scheme ends this year.
The SME Talent Programme by SPRING Singapore, on the other hand, aims to help SMEs recruit Institute of Technical Education, polytechnic and university students through study awards. However, according to the study, this alone cannot solve the perception problem among SMEs.
“Singaporeans, especially the younger generation and those with higher education qualifications, are not keen to work for SMEs because they perceive a lack of career progression and poorer work-life satisfaction,” Yahya said in the paper, adding it would take a national effort to create a cultural shift that would change this perception and how SMEs view employees’ needs.
In the meantime, SMEs can adopt short-term solutions to grab opportunities for growth. Not to be weighed down by human resource issues, available technology such as business software for payroll and employee benefits as well as for accounting and inventory can keep operations running smoothly.
These business tools, some of which are offered through the cloud and many have been designed for use of SMEs, adeptly aid existing staff in accomplishing tasks as these are packed with features that simplify business processes.
Solution providers even offer user training to maximize the functions and software trial to demonstrate its capabilities first-hand. Besides addressing the lack of skilled labour for the short term, some of these business solutions can also be availed and deployed through a grant