TheOnlyGayInTheVillage
14-06-12, 18:49
SMEs moving, scaling down or closing
Firms seeking ways to deal with new foreign worker quotas next month
The Straits Times - June 11, 2012
By: Janice Heng , Cai Haoxiang
PHOTO: THE STRAITS TIMES
THE last time warehouse logistics firm Ocean Pearl Shipping managed to hire a Singaporean was back in 2006.
The small enterprise has 14 workers and needs more if it wants to take on more jobs.
But it cannot find Singaporean workers for the back-breaking task of moving goods up and down staircases to lorries.
Nor can it hire more foreign workers, because it has already reached its maximum number - six - allowed under the new dependency ratio ceiling (DRC) that will kick in next month.
The DRC is the maximum number of foreign workers a firm can hire for every Singaporean.
'I don't dare accept big jobs,' says Ms Lim Bee Lay, 48, who runs the firm. 'And since levies are getting higher, I'd rather do less than do more.'
Mr Raj Mulani, 42, an executive partner at The Alchemy Partnership, an advertising agency, faces a similar problem.
In January, he lost an art director from Switzerland when her S-Pass was not renewed. The 'production' of ideas, he says, cannot simply be cranked up. 'Everything comes from talent.'
Such is the plight of many small and medium-sized enterprises (SMEs), with foreign worker quotas due to be tightened in three weeks' time.
Many of them are already having trouble filling vacancies, and are bracing themselves for the worst. Some construction firms have put projects on hold or prepared to scale down operations, while several manufacturers are considering moving to cheaper locations like Malaysia, Indonesia and Vietnam. And some are wondering whether they might be forced to close down altogether.
Such worst-case scenarios are being floated as Singapore moves to reduce its reliance on foreign labour.
While many Singaporeans want to stem the inflow of foreigners, businessmen worry about the impact of these moves on the 160,000 SMEs which account for the bulk of employment here.
From next month, the DRC will be lowered from 65 to 60 per cent in the manufacturing sector, and 50 to 45 per cent in services.
The ceiling for higher-skilled S-Pass holders will also be lowered from 25 to 20 per cent.
At the same time, foreign worker levies will be gradually raised, so employers may be paying $150 to $330 more per worker by next year.
When The Straits Times did a quick check of 25 SMEs with an-nual sales revenues of between $10million and $100million, it found half expected the resulting labour shortages and higher wage costs to affect their expansion plans. Two-thirds said they had been hit when foreign worker levies were raised in 2010 and last year.
Business leaders say the companies hit hardest will include those in construction, manufacturing, wholesale, logistics, food and beverage and retail.
Lucky Joint Construction is one of them. 'We will scale down, make sure projects that we take are profitable,' says its managing director, Mr Yeow Kian Seng.
'Otherwise, we are paying salaries, CPF, levies every fortnight or month. If we don't have enough cash coming in for projects completed, it is dangerous - the company might go bankrupt.'
And while the changes aim to encourage companies to hire more Singaporeans, SMEs argue that locals are simply not interested.
Singaporeans, they say, prefer office jobs, do not want to work as loaders, shop assistants or factory workers, and try to avoid working in industrial estates.
Mr Warren Teh, general manager of an IT retailer, says he has tried to hire more Singaporeans, but they do not stay for long.
He also tried to hire older workers past the age of 62, but only one person expressed interest - and did not turn up for the interview.
And when locals quit, it effectively reduces the number of foreigners he can hire. 'If we can get some Singaporeans in, it's like striking the lottery,' he says.
Firms seeking ways to deal with new foreign worker quotas next month
The Straits Times - June 11, 2012
By: Janice Heng , Cai Haoxiang
PHOTO: THE STRAITS TIMES
THE last time warehouse logistics firm Ocean Pearl Shipping managed to hire a Singaporean was back in 2006.
The small enterprise has 14 workers and needs more if it wants to take on more jobs.
But it cannot find Singaporean workers for the back-breaking task of moving goods up and down staircases to lorries.
Nor can it hire more foreign workers, because it has already reached its maximum number - six - allowed under the new dependency ratio ceiling (DRC) that will kick in next month.
The DRC is the maximum number of foreign workers a firm can hire for every Singaporean.
'I don't dare accept big jobs,' says Ms Lim Bee Lay, 48, who runs the firm. 'And since levies are getting higher, I'd rather do less than do more.'
Mr Raj Mulani, 42, an executive partner at The Alchemy Partnership, an advertising agency, faces a similar problem.
In January, he lost an art director from Switzerland when her S-Pass was not renewed. The 'production' of ideas, he says, cannot simply be cranked up. 'Everything comes from talent.'
Such is the plight of many small and medium-sized enterprises (SMEs), with foreign worker quotas due to be tightened in three weeks' time.
Many of them are already having trouble filling vacancies, and are bracing themselves for the worst. Some construction firms have put projects on hold or prepared to scale down operations, while several manufacturers are considering moving to cheaper locations like Malaysia, Indonesia and Vietnam. And some are wondering whether they might be forced to close down altogether.
Such worst-case scenarios are being floated as Singapore moves to reduce its reliance on foreign labour.
While many Singaporeans want to stem the inflow of foreigners, businessmen worry about the impact of these moves on the 160,000 SMEs which account for the bulk of employment here.
From next month, the DRC will be lowered from 65 to 60 per cent in the manufacturing sector, and 50 to 45 per cent in services.
The ceiling for higher-skilled S-Pass holders will also be lowered from 25 to 20 per cent.
At the same time, foreign worker levies will be gradually raised, so employers may be paying $150 to $330 more per worker by next year.
When The Straits Times did a quick check of 25 SMEs with an-nual sales revenues of between $10million and $100million, it found half expected the resulting labour shortages and higher wage costs to affect their expansion plans. Two-thirds said they had been hit when foreign worker levies were raised in 2010 and last year.
Business leaders say the companies hit hardest will include those in construction, manufacturing, wholesale, logistics, food and beverage and retail.
Lucky Joint Construction is one of them. 'We will scale down, make sure projects that we take are profitable,' says its managing director, Mr Yeow Kian Seng.
'Otherwise, we are paying salaries, CPF, levies every fortnight or month. If we don't have enough cash coming in for projects completed, it is dangerous - the company might go bankrupt.'
And while the changes aim to encourage companies to hire more Singaporeans, SMEs argue that locals are simply not interested.
Singaporeans, they say, prefer office jobs, do not want to work as loaders, shop assistants or factory workers, and try to avoid working in industrial estates.
Mr Warren Teh, general manager of an IT retailer, says he has tried to hire more Singaporeans, but they do not stay for long.
He also tried to hire older workers past the age of 62, but only one person expressed interest - and did not turn up for the interview.
And when locals quit, it effectively reduces the number of foreigners he can hire. 'If we can get some Singaporeans in, it's like striking the lottery,' he says.