singapore sme productivity

Small businesses and productivity in Singapore

Machines and digitisation are part of the solution in increasing productivity of Singapore’s small businesses.

However, let us consider this scenario which one can assume most home owners have personally experienced:

– one’s washing machine has broken down after warranty ends and he calls in the servicing agent. A fee of $35-$80 is levied even before actual repair works begin.

Now imagine the costs incurred by the average small business when their machines have broken down or require routine servicing. Easily, $350-$500 is chargeable before work begins.

Nature of small businesses

Most will have at least one friend who runs a business, or who has given business a go but failed. The difference between said friend and the average worker is that the friend owns his job. That’s it.

The average small business profit is more or less equivalent to the opportunity cost of working the small business, which in turn is more or less equivalent to the average worker salary. The business owner merely owns his job.

If $35-$80 workless fee paid out of the wage of a salaried worker for personal reasons sounds expensive, imagine $350-$500 of workless fee paid out of the “profits” by the small business owner. Now add in the actual servicing cost; another few more hundreds minimum.

To be sure, a small business owner must take home the equivalent of his opportunity cost, or he folds. And that opportunity cost is necessarily the income he would have earned if he sought work outside instead. It is a myth that small business owners make two to three times that of his peers’ wages; “Entrepreneur” has an outsized reputation relative to reality.

Hence, the upkeep of tools of productivity is expensive, if the business survives that far.

Nature of tools of productivity

Electrical and mechanical machines are more easily serviced than software controlled machines

Collapse of the infrastructure support for tools of productivity

Independent engineers /  freelancers

My machines are serviced by technicians of advanced age. They belong to an era where one, who has had a chance of apprenticeship, or has had a modest education in our local vocation schools, or has had the privilege to attend local universities or even overseas, builds a future for himself freelancing.

However, the trained and educated technicians and engineers of today rarely depart from the institutionalised job seeking culture: study, get a certificate, get a job, any job. Does trained engineers entering finance in droves sound familiar?

There is no greater confirmation than economic migrants entering Singapore to fill these jobs. Even then, employment is likely sought in MNCs, ie the servicing agents that levy the pre-servicing fee.

For context, my freelancing technicians enter my premises at no cost, services my machines for that few hundred dollars, but all of it straight to their pockets.

Imagine the sushi conveyor belt being serviced by a freelancing technician; it is inconceivable.

Spare parts market

My grandfather would frequent the Sungei road thieves’ market for these reasons:

  • to find spare parts for our factory’s machinery
  • to get connected with the community there

They didn’t used to merely trade vintage pieces, modest spare parts, but used to be a thriving market for spare parts that support the manufacturing sector in Singapore. Furthermore, the vendors and people that frequent this market used to be engineers / technicians in their own right.

Here are some photos from one of my favourite sites, Witono’s Freestyle, capturing moments at the market over a period of 10 years.



Photo by Witono, the freestyle photographer

Together, the decline in prospect for independent go getter engineers and the disappearance of such markets contribute to Singapore’s small businesses to increase productivity.

As an emphasis, perhaps machinery for the manufacturing sector is moot. However, the same is true of digitalising our small businesses today. Websites are mostly developed in India with little to no follow up support, software are costly to purchase and maintain from irrelevance as well as hackers.

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