Is contracting the new normal? With offshoring, redundancies, and talks of economic slowdown, it’s quite a respite to see optimism in the contracting space with demand for contractual workers on the rise in 2016 and beyond.
Many financial institutions in the region are focussed on hiring contractual talent, instead of permanent hires, owing to the slump in the global economy. Also what is interesting is that a lot of senior and experienced professionals in Singapore from the banking and finance industry are open to working on contracts.
With flexi-work and remote working arrangements as an employment option on the rise, the issues of global talent crunch and skills shortage seem to have been temporarily addressed with contracting models at play. Supporting this boom are the advancements in technology that facilitate easy global connectivity across markets to connect with professionals and get work done at lower costs.
Singapore which was then known for being an immature market for contracting has seen an evident increase in the number of temporary and contractual workers in recent years. According to the Manpower Ministry’s 2015 Labour Force Report, there were 202,400 contract employees in Singapore in 2015, thus forming 11.3% of the resident workforce.
Employees who have worked for the company for at least three months as terms of the contract are entitled to annual leave, sick leave, maternity leave, paternity leave, adoption leave, and extended childcare leave.
Unlike freelance work, which requires an employee to work on specific projects, contractual hires are on fixed-term employment contracts, and their association with the company ends on expiry of the contract period, unless further renewed. Generally contracts in Hong Kong and Singapore are for duration of a year, and this work model is being increasingly used by large banks and corporations such as Citi, Standard Chartered, J.P. Morgan, and HSBC, to name a few.
Whilst hiring contract workers is made with an attempt to reduce headcounts and costs incurred without impacting productivity loss, banks in Singapore are cautious when it comes to turning a contractual employee into a permanent one – unless they prove themselves to be high-performing and valuable to business.
Contracting is not just restricted to blue-collar jobs today, even white-collar jobs in banks and financial institutions have been impacted by the gig economy. Ministry of Manpower (MOM), National Trades Union Congress (NTUC), and the Singapore National Employers Federation (SNEF), have jointly congregated efforts to support contractual workers in the region by setting up Tripartite Guidelines on the Employment of Term Contract Employees.
Why opt for contract working?
Some of the undeniable advantages of contract working until you secure a permanent job are:
• It’s easy to move on. If you do not like the environment of your current contract, you can easily move on to a new contract without worrying about how it may appear to your new employer. You do not need to show loyalty, the contract only seeks excellent service.
• You are your own brand. This means you cannot take your job for granted. If you do not meet your employer’s expectations there is always someone in queue to replace you. The competition has got a lot tougher, and if you charge a premium, then your performance should justify your income demands.
• You have to earn your keep and the employer gets what they want. This creates a win-win situation for both the employer and the employee into a contract.
• Added flexibility and more benefits are rewarded when an employee exceeds performance expectations. With companies emphasising on profits and competitiveness, the contractual workers are consistently evaluated based on their performance at regular intervals.
Changing the future of work: The contracting way
In the years to come, businesses especially structured around projects have the greatest propensity to hire contractual staff. Contractual staffing will be seen in industries like oil and gas, engineering, pharmaceutical, financial services, and IT, along with demand in blue-collar professions as well.
Most HR professionals expect at least a fifth of their workforce to be comprising of contractual workers by 2022, according to findings cited in a 2014 PwC survey. Do temporary workers hold the key to alleviating skills shortage in the Asia Pacific region?
With the boom witnessed in contract employment opportunities in Singapore, Professionals, Managers, and Executives (PMEs) in the region are not left behind either, they are forced to join this employment trend.
Besides the private sector, many government agencies are also introducing contract PME positions to manage excess workload during peak periods of business, fill in for an absent employee, and assist during interim search for more permanent employees or to introduce new skills in an organisation that may be lacking amongst permanent employees.
Microsoft has nearly two-thirds as many contractors as full-time employees. For the younger cohort, the idea of lifelong employment with loyalty to a single employer does not apply. They are always on the lookout for new challenges and opportunities to upgrade skills and explore new markets.
Contracting offers just that and a lot more to meet job satisfaction and employee engagement of tomorrow’s workforce. Outsourcing tasks to contract workers signals a major shift in business models of working from “relationship to a transaction-based approach,” according to Gartner analyst.
On the flipside of positives of contracting, would businesses in the future do away with full-time workers to save on costs? Would you need to actually wake up, board the MRT, and go to work in 2030? Do you think your colleagues at work would be humans or some of them robots, and invisible algorithms on computers responding to your queries?
These are some of the questions on every professional’s mind, as the trends shift to artificial intelligence, changing work-life priorities and the concept of work redefining itself in corporate. What do these shifts signal for the type of employment for PMETs and fresh graduates in Singapore?
These changing times demand workers to not get used to the idea of a steady monthly salary which commensurate with seniority and experience, but focus on continuous learning, skill upgrade, and embrace the idea of flexibility that the future of work demands.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Ben Chew is a serial entrepreneur with 15 years of experience in the HR/Recruitment space. He currently has several HR tech projects, including a successful boutique recruitment business – TBC HR Consulting which is based in Singapore. He is also the Managing Director of Strategia Ventures. Ben is also involved in many community initiatives in the local startup ecosystem, including Startup Jobs Asia.