SMEs applaud changes but worry about rising costs

 Office workers at Market Street in Tanjong Pagar.
Office workers at Market Street in Tanjong Pagar. ST PHOTO: RUDY WONG

Small and medium-sized enterprises (SMEs) here have voiced concerns abut costs climbing as a result of changes announced at the National Day Rally.

Prime Minister Lee Hsien Loong announced on Sunday that working fathers will receive an extra week of paternity leave, paid for by the Government, if employers opt in under the new scheme.

This means male employees will be eligible for a total of two weeks of paternity leave, instead of one.

Mr Lee also said the re-employment age will be raised from 65 to 67 by 2017.

Industry watchers and local businesses The Straits Times spoke to mostly gave the two changes the thumbs up, but also raised concerns about their implications.

Wages aside, SMEs will have to bear additional costs for their overall staff if they are to offer employees an extended period of paternity leave, noted Mr Kurt Wee, president of the Association of Small and Medium Enterprises.

These include the expense of hiring replacement workers in an environment where the cost of doing business is already "quite high".

"It's good that the scheme is voluntary for now, but we hope the Government will give this measure some serious consideration if it's going to be made mandatory in future," said Mr Wee.

Mr Victor Tay, chief operating officer of the Singapore Business Federation, said smaller-scale businesses, in particular, are "apprehensive of more absence of employees in an already resource-tight environment".

"Some entrepreneurs have pointed out that, with public holidays, personal leave and even national service, employees might be away for up to two months (in a year)."

Ms Stella Tan, human resource manager at food and beverage firm The Soup Spoon, said the move will help "create a happier workforce".

But rising costs continue to be a cause for worry for the company, which is "trying to stay lean" while coping with the chronic labour shortage across the sector.

Ms Connie Kwan, chief operating officer of home-grown chocolate manufacturer and wholesaler Aalst Chocolate, said: "If companies can get tax credits for paternity leave, this will make (the scheme) more attractive to them."

As for the higher re-employment age, Mr Tay said it is a "natural" move in an ageing society to retain the senior workforce, given the country's tight labour situation and limited resources.

"But it takes two hands to clap. Employers can offer re-employment but employees must want to work," he added, noting that most seniors tend to retire instead.

Mr Jerry Lim, chief operating officer of local restaurant chain JP Pepperdine, said: "If senior employees are competent and still able to work, there's no reason for us to not support them, especially in today's labour- starved market."

About 7 per cent of the company's 320-strong workforce are Singaporeans or permanent residents above 65 years of age.

"It also helps because they have knowledge and experience to pass down to younger staff," he said.

A version of this article appeared in the print edition of The Straits Times on August 26, 2015, with the headline 'SMEs applaud changes but worry about rising costs'. Print Edition | Subscribe