SINGAPORE (Nov 20): Manpower issues among small and medium enterprises (SMEs) have eased as they have been adjusting their business models and improving productivity by investing in technology and streamlining their processes, according to the 2017 SME Development (SMED) Survey.

The survey was conducted by DP Information Group, part of the Experian Group, on Singapore’s SME community, with 2,522 SMEs taking part in it.

In this year, the proportion of SMEs experiencing difficulties with manpower costs fell to 70% – below the 2012 level of 72% when foreign labour restrictions were introduced.

Concerns about manpower increased to 85% in 2013 and has since declined every year, indicating that SMEs are adjusting to the changes in the labour market.

In addition, there has also been a decline in proportion of SMEs having difficulties hiring the staff they need, from 49%in 2014 to 26% in 2017.

As manpower and hiring concerns ease, the SMEs are able to shift their focus towards revenue generation and growth strategies, as SMEs whose main cost management strategy was to raise productivity fell from 42% in 2016 to 29% this year.

Dev Dhiman, managing director, South East Asia & Emerging Markets for Experian, says, “We are seeing a new phase in the development of Singapore SMEs where their focus is shifting away from surviving the restriction on foreign labour, towards winning market share and growing their businesses.”

Moreover, the businesses strategies that SMEs now intend to pursue in the next 12 months are primarily focused on growing their businesses, with an increased emphasis on marketing and branding to expand their client base as well as generate increased loyalty and patronage from existing customers.

However, more than 35% of SMEs have finance-related issues, a 13% increase in the last 12 months and the highest percentage since the survey began tracking the issue in 2011. This issue has more than doubled since 2014.

Among the 35% of SMEs with finance-related issues, the proportion experiencing delays in payments from customers significantly increased to 81% this year from 14% last year.

Customer payment problems have overtaken high interest rates as the dominant finance-related issue confronting SMEs.

As more customers delay their payment, there is a concern it will have a domino effect causing more SMEs to experience cash flow shortages which in turn will lead to them delaying payment to their customers.

Investing in technology has been a common response of SMEs to the tighter labour situation. This year, 55% of SMEs have made fresh investments in technology and innovation.

The moderation in investment indicates that this is no longer as pressing as it was a few years ago.