Should you be hiring more part-time employees?

With 228,000 Singaporean residents currently employed part-time – an all-time high – firms are looking to see what effect this rising trend may have on their businesses. In their second quarterly economic survey for 2017, the Ministry of Trade and Industry found results encouraging.

According to the survey, the rise of the part-time workforce could be due to both supply and demand factors. More and more Singaporeans prefer to work on a part-time basis due to lifestyle choices or domestic obligations. Meanwhile, companies affected by the rising labour shortage may find useful having a pool of part-time workers to pull from as the need arises.

Government programmes like the Work-Life Grant may have also helped increase part-time employment, by providing funding for companies to offer more flexible work arrangements and so allowing more companies to hire part-time employees.

So what kind of effect might this have on businesses?

“Human capital theory predicts a negative relationship as part-time workers tend to participate less in training,” the report stated. “This could be because part-time employees work fewer hours, and may thus benefit less from training than full-time employees. At the same time, firms may also be less willing to train their part-time workers.”

That said, hiring on a part-time basis may also improve productivity, allowing firms to adjust their workforce based on their individual demand. More workers might be deployed during peak hours, and less during slower points in the work day. By allowing businesses more flexible, shift-based systems, firms may even find part-time workers more effective than full-time ones.

Based on their survey, the MTI identified three sectors – Retail Trade, Accommodation, and Food Services – and found that, within them, there was no detrimental effect of higher shares of part-time employees on overall firm productivity.

More importantly, they found an overall positive and statistically significant relationship between productivity and part-time employment share for firms in the Retail Trade sector. Here, for every one percentage-point increase in part-time employment share, there is a 0.17% increase in firm productivity.

With minimal technical training involved and largely variable activity during business hours, firms in the Retail Trade industry stand to gain the most from hiring part-time workers. Additionally, more employment on a part-time basis means opportunities for employees unable to devote majority of their time to work, and so a larger labour market for firms to tap into.