Half of small and medium-sized enterprises (SMEs) prefer to hire local workers, but the majority say they face difficulty in hiring them.

According to a survey by the Singapore Institute of Management (SIM) that polled 170 SME owners and managers, the small local talent pool, high salary expectations and complacent attitudes were some of their top challenges when it comes to hiring locals.

As a result, 14 per cent said they prefer foreign hires, while 35 per cent of them were neutral.

Chan Chong Beng, president of the Association of small and medium-sized enterprises (ASME), told BT that the statistics coincide with their findings.

"Most SMEs are looking primarily to hire local Singaporeans. Hiring Singaporeans removes the problem of communication and cultural and language barriers. This is extremely important for internal communication and sharing of ideas on businesses as well as external communication with customers, clients and suppliers," he said.

The survey also revealed that the majority of SMEs agreed that productivity is the key to improve business competitiveness as well as to lower the cost of doing business and increase business satisfaction.

The most highly preferred method to raise productivity was "improvement of processes and procedures", followed by "changing the mindset of management and workers" and "training of workers".

Most SMEs also saw the need for innovation, but the two biggest impediments were the high cost of introducing new technology and the training of workers to implement it.

Over three quarters of SMEs surveyed said they had utilised the various government assistance schemes and found them useful. These schemes include loans, grants, tax incentives, equity financing and non-financial assistance to help start a business.

However, SMEs said it was difficult to determine which schemes were most relevant to their companies, and that the paperwork involved was tedious.

Sundaram Janakiramanan, professor of finance programme at SIM University, suggested several ways for the government to resolve this issue.

"Have consultation with various industry sectors to understand the major issues the particular sector faces and devise schemes that would help that particular sector," he said.

He said there should be strict guidelines as to who can offer consulting services with respect to processing the application for schemes.

SMEs can also access free business advisory to help them start, sustain and grow their businesses through a network of SME Centres, under the support of Spring Singapore.

The one-stop SME Centres provide services including business diagnosis, advisory on government schemes and capability workshops.