The Jobs Growth Incentive will entice companies to hire older workers, whose higher salary expectations are one of the bigger challenges this demographic poses for employers, analysts said.
But this must go together with training, they added.
The $1 billion scheme was announced by Deputy Prime Minister Heng Swee Keat on Monday, aimed at boosting hiring of local workers, especially the older ones.
Firms that hire local workers over the next six months will receive a subsidy of up to 25 per cent of their salaries for one year, subject to a cap. This applies to growth firms that meet the qualifying criteria.
The co-payment goes up to 50 per cent for workers aged 40 and above.
OCBC Bank's head of treasury research and strategy Selena Ling said: Mature workers may face many challenges, ranging from higher salary, possibly obsolete skills, (to) lack of digital skills, and perceptions that they are less nimble."
She added that the co-payment is "very generous" and can be seen as giving a big push for the SGUnited Jobs and Skills Package, which helps to expand job, traineeship and skills training opportunities for Singaporeans hit by the pandemic.
National University of Singapore Business School associate professor Lawrence Loh said the co-payment will also tilt the balance for many companies towards employing older workers, who are often disadvantaged in the job hunt.
"Older workers are price takers in the job market now, especially amid the pandemic crisis. Their previous jobs will have higher salaries and if these levels are expected in the new job situations, there is certainly a mismatch. The double whammy is that the high pay is coupled with old skills," he said.
"The co-payments will hopefully help defray any retraining costs or even bring up the pay as close to previous levels as possible."
Maybank Kim Eng senior economist Chua Hak Bin said the incentive will also push firms to consider the merits of older workers more seriously, which is important as the population ages, and a failure in this respect can lead to a rise in structural unemployment rates in the mature population.
"There is a risk that firms may retrench older workers because their pay is likely higher than younger recruits'. Older workers may also be more set in their ways and less willing to switch roles if the firm has to change direction, particularly towards adopting new technology."
These same factors could hinder them from getting hired.
So, besides incentives, the workers also have to play their part, Mr Chua said. "Training and reskilling will help, but a mindset change might also be required on the part of the older workers."
Companies that are hiring said the new scheme is encouraging in supporting their efforts, especially towards mature workers.
Hair care firm Beijing 101 Hair Consultants, which has almost 20 job openings, said the incentive can also reduce manpower costs, especially if the mature worker needs more time to pick up the required skills.
Its human resource manager Coco Lim said: "We have mature workers in different roles like hair therapist, customer service officer and roadshow promoter, for example, so it is very much dependent on what the mature workers want and their willingness to learn."
Mr Imran Bustamam, group head of human resources at logistics firm Ninja Van, said: "We do not discriminate when hiring, and have several older employees in various roles across the organisation. All staff across all levels of the organisation are offered training and development initiatives." It has about 100 positions open now.
A DBS Bank spokesman said: "DBS is committed to helping more mature workers adapt to the new normal and encouraging employees to embrace continuous growth and development in their career journey. We have in place proactive professional conversion programmes to help equip employees with the skills and competencies to be future-ready."
Earlier, DBS announced it intends to hire over 2,000 people in Singapore this year.
It is also reskilling employees across departments in eight job roles ranging from back-end banking operations to client-facing ones, to help staff gain the necessary knowledge and competencies to take on new or enhanced roles.