SINGAPORE - The new bus contracting model, in which routes are tendered out for operators to bid for, will benefit both commuters and transport workers, Senior Minister of State for Transport Josephine Teo said on Saturday.

"Competition for skills... people to do the jobs will intensify," she said. " From that perspective, we see the bus contracting as providing that opportunity for operators - present and future - to think about how they could step it up to a different level."

With the potential for more players to enter the market, bus companies must not only ensure operations are well run, but also step up their recruitment, staff training and career development, she added.

The inaugural tender under the Government contracting model was awarded to London-based Tower Transit on May 8. The firm beat seven other bidders including incumbents SBS Transit and SMRT.

Tower Transit will progressively take over the bus services currently run by the incumbents from the second quarter of 2016.

The company has said that it will offer a "better" employment package than currently offered by SMRT and SBS Transit.

Mrs Teo, who was speaking on the sidelines of a community event in Toa Payoh, said the transport workers' union has met with Tower Transit to discuss the transition.