Gig workers seek benefits, social security protection as pandemic bites hard

Photo by Jason Miraples on Unsplash

When delivery rider Simon was hospitalised for three weeks due to an infection last year, he had to cough up S$1,000 in car rental fee although his vehicle was sitting idle. Since he was unable to work, he also lost out on his S$1,400 weekly earnings.

Those three weeks cost Simon, who has been a driver with Lalamove for over two years in Singapore, more than S$5,000, excluding medical expenses. He asked to be identified only by his first name to avoid a backlash at work.

Despite working full time, Simon is classified as an independent contractor, similar to most other gig economy drivers and riders in the region. The categorisation does not seem to bother him but said they could do with more support.

“Gig workers made this choice. I can choose to do more or less. There’s the freedom of doing more if I want more money… but it’s tough. Costs are rising,” he said, referring to the hike in petrol duties in February in Singapore as well as in general living expenses. In addition, earnings have been stagnant for gig economy workers since the start of the COVID-19 pandemic due to the availability of more drivers on the road.

Simon says he would like gig economy companies to offer their drivers health and safety benefits in view of their long hours. Several delivery riders and ride-hailing drivers in Singapore that DealStreetAsia spoke to echoed the sentiment, as did market observers in Southeast Asia.

The topic of rights in the gig economy has resurfaced in recent months across Southeast Asia due to COVID-19 and its resulting economic fallout. Long hours, increased competition, and health risks have led to more frequent worker protests and scrutiny from governments.

Last week, Singapore Prime Minister Lee Hsien Loong zoomed in on the gig economy in his annual National Day Rally speech, highlighting the difficulties faced by workers.

“Delivery workers are, for all intents and purposes, just like employees,” Lee said.

“The online platforms set the price of their product [and] manage how the workers perform, including imposing penalties and suspensions,” he continued, singling out Grab, foodpanda, and Deliveroo. “Yet delivery workers have no employment contracts with the online platforms. Therefore they lack the basic job protection that most employees enjoy, like workplace injury compensation, union representation and employer CPF (Central Provident Fund, Singapore’s social security system).”

He went on to say that such workers will find it hard to afford housing, healthcare, and retirement and that policymakers will be studying how to improve their current situation.

“It’s long overdue,” said Dr Kok Hoe Ng, a senior research fellow at the Lee Kuan Yew School of Public Policy, who is currently working on a research project on work and security in the gig economy.

This is not the first time Singapore’s policymakers will delve into what gig workers need. Between 2017 and 2019, the Ministry of Manpower worked with labour groups and introduced measures such as voluntary top-ups to medical saving accounts, and extending payment dispute management services to these workers.

The group found that workers did not expect the gig work providers to offer “employment benefits or treat them as regular employees,” ministry representatives said in a forum letter to the Straits Times in December 2019.

Rising numbers, falling earnings

Earlier this year in Singapore, former manpower minister Josephine Teo reported that own-account workers — those who, working on their own account or with one or more partners, hold the type of job defined as a self- employed job, according to OECD — saw their earnings fall last year. The median gross income of the top three occupations using online matching platforms – full-time resident private-hire car drivers, taxi drivers and delivery drivers – fell from S$2,000 in 2019 to S$1,500 in 2020. Gig workers in Singapore fall under the own-account worker category.

In comparison, the median income of a full-time employed Singapore resident in 2020 was S$4,534, thrice these own-account workers.

The ratio of own-account workers rose to a decade-high last year, making up 9.7% of the resident workforce, a manpower ministry report published this year showed.

The number of residents engaged in own-account work on a non-preferred basis also rose to 37,400 in 2020 from 21,000 in 2019, reflecting last year’s weaker job market conditions, the report wrote.

“With huge job losses, there’s a huge influx of new entrants [because of its] low barrier to entry,” Ng said. “That adds to further volatility to their earnings because it increases competition for jobs.”

“We’ve heard from workers that … initially the orders really surged [during the first lockdown], but very quickly, earnings dropped to below pre-pandemic levels because a lot of people started doing it,” he pointed out.

Wage floor and pension scheme

Ng believes that a minimum wage or fare should be set so that these workers are able to properly plan their finances for their future. For example, workers could sign up for shifts where they are guaranteed a minimum payment if they complete all their deliveries during that period, and receive top-ups if they deliver more than the assigned amount.

Adam, a ride-hailing driver in Singapore for over two years, agreed that fares should be regulated. He asked that only his first name be used. “Sometimes the fare is too low,” he said. “Hazard pay should also be added when it rains.”

Both gig economy observers and workers say they would like to see companies make their fair share of social security contributions since the workers are essential to helping the companies make money.

Ali, a 25-year-old GrabFood rider, said he joined the platform last year after losing his job as a cleaner when companies shut their offices. He said he would like to see CPF contributions from the company so he can feel more secure about his future, especially since he does not know how long he will have to do this job.

Currently, most workers make voluntary contributions to programmes such as MediSave in Singapore and to one’s Social Security Organisation (SOCSO) account and the Employees’ Provident Fund in Malaysia. There are about 2.5 million self-employed people in Malaysia as of June 2021, according to the country’s statistics department.

“If you don’t have enough money to begin with, how do you voluntarily contribute to something?” says Raja Ahmad Iskandar Fareez, the communications and engagement director at Malaysian think-tank Research for Social Advancement.

The missing safety net

A third benefit that workers and observers said is crucial is the need for health and safety protection.

Workers said they are at high risk of getting injured or falling sick as they are on the road between eight and 12 hours a day. Yet, unlike employees, they are not covered by workplace injury protection or paid sick leave laws. Insurance coverage is also patchy.

For example, in Singapore, Grab, Deliveroo, and foodpanda offer free third-party liability insurance to delivery riders, while Grab, Gojek and Deliveroo offer free personal injury insurance to riders and drivers. Grab and Gojek also provide paid medical leave to their delivery and ride-hailing agents.

Ian Lim, head of employment & labour at TSMP Law Corporation, said it would probably not be ideal to leave it to the platform companies to decide how much and what type of insurance coverage or accident compensation to provide.

“At the moment it’s quite ad-hoc,” he said. “I think it’s hard to leave it completely to the free economy, and to rely on companies to behave altruistically when they are ultimately profit-driven. It would therefore be preferable to statutorily mandate at least some minimum protections.”

A Grab spokesperson said the company supports a common specification for the industry.

“A coordinated approach with common standards across the industry could help ensure that they receive similar protections even if they move between companies,” the representative said in a statement, adding that the company has been engaging with Singapore’s national labour union and manpower ministry on strengthening gig worker protections.

A Gojek spokesperson said the firm also engages with governments and unions. “We recognise that they also want security and income stability like all workers do.”

Flexibility vs security

In their statements, gig work providers say they welcome talks of improving the workers’ livelihoods, and that they have introduced more programmes that do so. Nonetheless, any new measure must take into account the flexible nature of this job.

“We are always open to new ideas about strengthening rider engagement. However, any such mechanism should respect the fact that riders are self-employed and overwhelmingly want to remain such,” a Deliveroo spokesperson wrote.

A foodpanda spokesperson said it is companies like theirs that have been a cushion to the economy.

“Job losses have been much higher than other years due to the pandemic and we’ve been able to provide temporary income-earning opportunities for thousands of retrenched workers,” the spokesperson said. “The flexibility we offer individuals to freely enter and exit the gig has been a key lifeline for retrenched workers to find critical temporary income relief at a time where the job market is uncertain.”

Observers agreed with the companies but said that just because the job is flexible does not mean they should not be accorded protections similar to employees.

“This idea that there is an unavoidable trade-off between flexibility and security, I think, is a false dilemma,” Ng said.

The business case for investors   

Corporate governance expert Lawrence Loh said savvy investors should have already priced a potential reclassification of contractors into employees into their investment decision.

“You cannot just look at present profits. To begin with, many [of the gig economy companies] are already unicorns, some even decacorns. The market is very smart — they know these companies have future value,” said Loh, a professor at the NUS Business School. “[Investors] care about the longevity of such a platform. Even if they lose [money] in the short-run…if you are in good relationships with regulators and consumers, you’ll be around for longer.”

It will also be good for their returns, given the greater emphasis on environmental, social and corporate governance (ESG) factors today. “Markets will place a premium on responsible companies,” Loh added.

A regulatory maze to tackle

Debates over gig worker rights have also emerged in other Southeast Asian countries, and show just how complicated regulating the industry could be.

In July, Malaysia said over 145,000 Grab and foodpanda drivers would be covered under a national insurance scheme, with the government paying the contributions for the first year.

But critics countered that the gig work companies should be the ones paying for the coverage. Member of parliament Charles Santiago equated the move to condoning the gig economy’s exploitative nature. A SOCSO official later told The Malaysian Reserve it had no power to force delivery platforms to implement the social protection scheme for the workers.

In Indonesia, after the Gojek delivery drivers protested against changes in the pay structure, manpower ministry official Indah Anggoro Putri said the authorities were ready to impose penalties against companies that violate the rights of gig workers, and could even revoke their business licence, Bisnis reported.

But some remain sceptical over the declaration. Izzan Faturrahman, an independent researcher who studies Indonesia’s labour practices, said that the pro-business government sees gig economy companies as important job providers.

He compared Indonesia to China, which recently introduced new gig worker laws, saying that the latter has a strong manufacturing sector that can absorb workers who leave the gig economy. In Indonesia, there is no industry these low-skilled workers can fall back on, he said.

And though Indonesia’s government introduce a minimum fare rule in March 2019, motorcycle taxis are still not recognised as a form of transportation. This policy has to be amended first before the officials can even begin considering its drivers as employees, said Gusti Raganata, a lecturer at the Indonesia Open University who studies transportation policy and the digital economy.

Finding a middle ground

According to most industry observers, it might make sense to regulate the gig economy workers under a third category – a middle ground between contractors and employees – that allows them to maintain their flexibility while receiving some of the benefits typically given to employees.

Fareez referred to the failure of California’s AB5 law as a lesson in going too far. The law, which passed in September 2019, was meant to make sure some gig workers, including those with the likes of Uber and Lyft, would be viewed as employees. Instead, many freelancers complained that they lost jobs because of it.

A year later, Proposition 22, which exempted app-based ride-sharing and delivery companies from AB5, was passed in the state. Last month, a superior court ruled Prop 22 unconstitutional, paving the way for an appeal and more legal debate on the matter.

“That was a case of trying to push something without understanding the whole thing,” he said, adding that government should give trade unions more power to ensure the workers’ voices are heard.

Raganata added that any new law must be collectively discussed. Not everyone may want to be considered an employee, for example. Perhaps they should be given a choice.

Adam, the Grab driver, said he would not want to be tied down to the company. “I chose this path to be flexible,” saying he likes that he can choose when to work as long as he put in his targeted number of hours.

TSMP’s Lim said authorities here could potentially take a leaf out of the UK playbook. In February this year, the UK Supreme Court ruled that Uber drivers were considered “workers” – a hybrid category under UK legislation that sits in between employees and contractors. “Workers” there are entitled to paid annual and sick leave, as well as the UK national minimum wage, amongst other things.

In Singapore, where there is no national minimum wage, we could potentially require that the platform companies provide CPF contributions instead, he said.

As for who is responsible for the cost of these additional benefits, the observers say this must be talked through carefully among all the stakeholders.

“There is always room to calibrate costs and [to whom] the costs fall. It’s not all or nothing. It’s not [like you] cannot touch them with any regulations at all and tomorrow they’ll pull out of Singapore. They won’t — it’s a huge market,” said Ng.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.