For many SMEs in Singapore, the Productivity Solutions Grant (PSG) feels like the ultimate shortcut: get government funding, adopt a shiny new HR or payroll system, and watch efficiency skyrocket. Sounds perfect, right?
But while PSG can be a useful stepping stone, there are still plenty of misconceptions about what it really covers, how it works, and what it means for your business long-term. Many SMEs discover only later that the grant doesn’t always deliver the affordability and convenience they expected.
7 Common Misconceptions About PSG
Let’s clear the air. Here are seven of the most common misconceptions about PSG — and what SMEs should keep in mind before relying on it.
PSG covers all the costs
It’s a common misunderstanding. In reality, PSG subsidises up to 50% of the eligible costs. The other half is still borne by your company. And keep in mind: add-ons, training, and subsequent renewals may not always be covered.
Once You get PSG, You’ll always enjoy the discount
Unfortunately, no. PSG subsidies typically apply only for the first year. From the second year onward, you’ll be paying the full subscription fee — which can come as a shock if you only considered the discounted rate when signing up.
Approval is instant
The process takes time. Applying for PSG can stretch over weeks, and approval isn’t guaranteed. If your application is rejected, you may need to reapply, delaying the adoption of the system you actually need.
You can choose any HR or payroll system You like
Not quite. PSG only covers pre-approved solutions from selected vendors. That means your choice is limited, and you may end up picking a system because it qualifies for PSG — not because it’s the right fit for your SME’s needs.
PSG makes my HR system affordable forever
PSG is designed as a short-term boost, not a permanent subsidy. While it lowers the initial cost, many SMEs face price shock when the grant ends and full subscription costs kick in.
PSG will always be around
PSG is a government initiative, but like all policies, it may evolve or even end over time. Building your HR and payroll strategy solely around grants leaves your business exposed if the rules change.
PSG vendors are always the best option
Being on the PSG-approved list doesn’t necessarily mean the system is the most user-friendly, scalable, or suitable for your business. Some SMEs find themselves stuck with complicated platforms that don’t align with their size, budget, or workflows.
Beyond PSG: Choosing What’s Right for Your Business
There’s no doubt PSG has been helpful in accelerating digital adoption. But SMEs should avoid the trap of choosing software purely because of subsidies. At the end of the day, the real question is: Can the system deliver long-term value at full price?
That’s where HRMLabs comes in.
- Affordable even without PSG – No nasty surprises when subsidies end
- Customisable – Pick only the features you need
- Scalable – Start small and expand as your business grows
- Singapore-ready – Built-in CPF, IRAS, and MOM compliance
With HRMLabs, you don’t have to worry about waiting for approval, being limited to certain vendors, or bracing for price shock when grants expire. It’s already a cheaper, faster, and easier payroll solution — even without PSG.
Final Thoughts
PSG is a great way to get started, but it shouldn’t be the only factor in choosing your HR and payroll system. Misunderstanding how it works can lead to wasted time, unexpected costs, and systems that don’t really fit your SME.
The smarter move? Choose a solution that’s affordable, sustainable, and built for the long haul.
