Contract vs Permanent Job Which is Better

Companies around the world are hiring more contract workers, and Singapore is fast catching up on this trend.

According to a study by Intuit, more than 80% of large corporations plan to substantially increase their use of a flexible workforce, with these contingent workers predicted to exceed 40% of the US workforce by 2020.

EY’s Contingent Workforce Study echoes similar sentiments. The 2018 study found that one in two of the employers surveyed have increased their use of contract professionals over the last five years.

singapore companies are hiring more contractors

Companies in Singapore are following the trend of building a more integrated workforce. In the Ministry of Manpower’s 2019 Advance Release Labour Force Report, the proportion of employees on fixed-term contracts has continued to increase as in previous years, rising from 7.2% in June 2018 to 7.6% in June 2019.

Furthermore, when an unexpected issue arises, such as COVID-19 in the beginning of 2020, original hiring plans will inevitably be impacted. When companies activate business continuity plans, employees may have to work from home, split their teams up to reduce interaction, and review their hiring budget to mitigate unexpected losses.

As such, companies may favour hiring contractors to manage workforce as an agile way of managing headcount and hiring budgets. There may also be a surge in demand for contractors after the issue is managed, as firms need extra headcount to make up for lost time.

Although there are positive prospects in contracting, many Singaporeans are still hesitant to accept contract jobs. Even when a contract position has been offered to them, many job seekers would still prefer to wait for a permanent role.

Singaporeans value the job security that a permanent position provides. The 2019 Employer Brand Research found that 18% of respondents surveyed in Singapore would give up 10% of their salary in exchange for better job security.

With an increasing number of contracting job opportunities available in the market, perhaps you should consider contract jobs and the gig economy as an alternative career option.

Let’s compare the benefits and advantages between contract and permanent jobs to help you decide.

3 pros of a contract job

1. acquire new skills and build your network

When you work with a new employer, you get the opportunity to do new work which may require new skills. Contract work also often includes projects that need a specific skill set. For example, a HR professional will need to use data to restructure compensation and company benefits programmes to accurately compensate sales staff for their contributions from both offline and online channels. Some companies in Singapore even offer training to help contract workers acquire new skills or deepen their capabilities.

You will also get to connect and collaborate with new people every time you join a company, which gives you the opportunity to expand your professional network. Being a contract worker is a fast way to become an expert in your field, simply by virtue of working on a variety of projects across a number of different organisations.

2. flexibility to build your professional portfolio

As a contract professional, you have the freedom to choose which employer and projects you want to work on.

A Singapore government career site shares an article about a middle-aged PMET who left his permanent position in a Fortune 500 company to start a career in contracting. Today, he finds his career to be highly rewarding, as he can take on lucrative and interesting projects from both SMEs and large corporations. As a contract worker, he’s not bound to a single company, and can choose to work on the projects he likes and which suit his capabilities – choices he would not be able to make if he was in a permanent role.

3. better job security in adversity

Contrary to popular beliefs, contract professionals may actually enjoy better job security than permanent staff these days. When a company goes through business restructuring, it is not uncommon for employers to retrench or change the job scope of a permanent staff, rather than a contractor who is due to leave in a few months' time.

Contractors usually sign six-month to two-year employment contracts, which secures them a job during that period. Because of their wide professional network, many contract workers often receive job offers and are able to secure their next gig before their current employment ends.

A local Redditor testified about the job security of contract work, “I’ve worked for 5 different companies over 15 years in Singapore. The main difference was that in a contract role I was paid more than what I would have received in a permanent job. Every contract I was ever on was extended.”

pros of permanent jobs

1. access to more employee benefits

Permanent staff enjoy employee benefits that contract workers are often not entitled to. Permanent workers typically get more benefits as they are likely to grow in the same organisation towards more senior positions. Hence, their benefits would include health packages to ensure that they remain healthy and abled as they continue to stay and work in the company.

Other employee benefits a permanent staff would be entitled to include insurance, retirement packages, paid leaves and training opportunities.

2. easy-to-follow career path

It is more straightforward for a permanent staff to be promoted in the same company. Every position has a growth track, and permanent employees have clarity on goals and KPIs to meet to move to the next level. With a deep understanding of the organisation structure and commercial operations, tenured professionals are seen to have better growth opportunities and more likely to be groomed for leadership and management positions.

Contractors, on the other hand, can only negotiate for a higher title and salary when they change employers.

3. no need to worry about approval of credit loans

Financial institutions need bank records as proof of documents of a stable income. Therefore, it is easier for permanent employees to get credit lines or loans from a financial institution, especially if they have already worked for 12 months prior.

Brian Gammey, who started working for Nissan as a contractor in the US, struggled to get a loan while he was in his contract job. “Even if you want to get a home loan, the bank looks at it and says, “Oh, well, you work for Yates Services. You’re a temporary employee. When are you going to get a real job?”

so, which is better for your growth?

When thinking about your career, it’s always good to weigh the contrasting benefits between a contract job and a permanent one.

If you are looking for a new challenge in your career and a contract offer that meets your job aspirations with a highly-attractive employer comes along, we’d say go for it. Who knows, if you perform beyond expectations in the role, you could even get converted to a permanent staff or other more exciting career opportunities.

Check out for the latest contract jobs in Singapore that are available right now.

contract vs permanent job - which is better for you?