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SMEs feel the blues of a tighter foreign labour supply

Wei Chan, owner of a mom and pop bakery in Ang Mo Kio spoke at two of tansitioning.org events. From what I understand from Gilbert, Wei Chan wanted to convince the audience that we need more cheap foreign workers in order for SMEs to survive. However, not only did he fail to get his message across, he soon became the target for the rest of the guys in the room. The conversation soon steered from a forum for minimum wage to one about migrant worker issues. At the heart of it was a very deep-seated problem faced by most SMEs in Singapore – businesses here are struggling to survive.

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Vincent Wijeysingha, Kumaran Pillai, Leong Sze Hian, Jolovan Wham and Wei Chan.

Wei Chan obviously was in the wrong neck of the woods. He soon realized that enough is enough and went back to where he hailed from and we didn’t see him around Gilbert’s forum anymore. I later found out that he sought company with ASME where his misery found other doting companions.

Like the story of Wei Chan, SMEs, who contribute to 50% of our national income, feel that they are left in the cold and with the government restricting the flow of foreigners in Singapore; these little businesses will have to either shape up or ship out (or close shop).

From the conversations that I have had with him and from what he has shared at the forum; behind his veneer of success is a struggling businessman. He depends on it to feed himself and his family. His workers depend on it and he is driven to succeed not because of greed but because of an ambition to do better than his predecessors, or plainly put because of the need to survive. For success would mean breakout from the economic trap(s) that hold us down.

Now, his hopes of building a better tomorrow, after investing thousands of dollars are dashed – the government plans to tighten the supply of foreign labour which he depends on to expand his business. He says the locals do not want to do it at the wage levels that he is offering. He can’t offer more because he will not be able to sustain his business at higher costs.

So, what can the likes of Wei Chan do?

If you’re an owner of an SME and have been adversely affected by the change in government’s foreign manpower policy, do not fret because there are ways to overcome this labour shortage by adopting strategies to overcome our over-reliance on cheap foreign labour.

But seriously, how much more can we innovate? If you have already invested in nice IT systems – point of sales, accounting, inventory management and automated your sales process or bought expensive machinery to cut down manual work, what else can you do?

Take a look at the two video below and you’ll be amazed but what our counterparts are doing:

Lay’s Vending Machine in Argentina

Automated cake baking machine in Japan

Now, why didn’t Wei Chan think of that? Or might it be that the cakes baked by an untrained foreign baker would be any better? I do not know.

But, what I know is that the noisiest fellas in our business community come from small businesses that are either too small to automate and not large enough to innovate (pun intended); and they often indulge in wallowing and attention seeking (just read the statements that come out from ASME).

Looking on the bright side, our G has decided to throw some good $$$ at this problem. However, throwing money at a problem is not a solution. What we need to do is to throw money where it matters most. There are few programmes, administered by A*Star and Spring Singapore that comes to my mind:

1. Technology Adoption Programme: A*STAR will help to link companies’ technology needs to solution providers to help companies across sectors increase productivity through adopting technology innovations and solutions. From July 2013, this programme will be piloted in six sectors – Construction, Food Manufacturing, Precision Engineering, Marine, Aerospace as well as Retail.

2. Capability Development Grant (CDG): supports up to 70% of the cost of productivity improvements and capability development that will result in greater enterprise competitiveness and business growth.

3. Collaborative Industry Projects: The Government will work with industry players and partners like Trade Associations and Chambers (TACs) to address sector-specific productivity challenges. Consortia with at least 3 SMEs, comprising solution providers and users, will be formed to develop and propose bottom-up deployable and scalable productivity solutions. SPRING will be looking at the Collaborative Industry Projects (CIP) in six priority sectors: Food Manufacturing, Food Services, Furniture, Printing & Packaging, Retail and Textile & Fashion…   for more information

There is also another programme that caught my eye – SME Talent Programme – where SMEs can attract local talent from ITEs and Polytechnics over the next three years. This is really commendable; something that they should have done years ago. Now, Wei Chan cannot say that he can’t find talent locally!

If you do need assistance or advise, please drop me an email or leave a message below.

Kumaran Pillai is a member of Action Community for Entrepreneurship (ACE). He also blogs actively, comments periodically, runs a business incubator daily and stages protests at Hong Lim Green when he feels the blues. 

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