GrabBike driver Nguyen Duy Dat moved from Tuyen Quang, a northern province in Vietnam, to capital Hanoi in hope of giving his family a better life.
His gig economy job paid well enough. The 30-year-old father of two would drive for 10-14 hours every day to earn 1.1 million dong ($46). After deducting fuel expenses and Grab’s commission, he took home about 700,000 to 770,000 dong ($30 to $32), at least double the daily earnings of an average Vietnamese urban worker.
Then COVID-19 struck and drivers such as Nguyen saw their income plummet by 50-70% in the wake of movement restrictions and muted consumer demand.
In December 2020, Vietnam introduced a 10% value-added tax (VAT) on ride-hailing companies per trip on the entire fare. These companies previously forked out a 10% VAT on their share of the fare – usually 20-25% of the trip charges – while the drivers paid a 3% tax on their income (75-80% of the fare).
In response to the new tax, Grab raised its commission – or take rate in gig economy parlance – for each GrabBike trip from 20% to 27.27%. For GrabCar, the rate was upped to 32.8%. It also increased its fares by 5-6%.
“The increase in take rates is due to the fact that it is included in the VAT portion of each trip, which is an indirect collection by Grab,” the company said in a statement then. Other ride-hailing companies such as Gojek also raised their fares and commission rates in response to the regulation.
But this response did not appease drivers like Nguyen, who joined hundreds of other GrabBike drivers in a strike demanding that the company revert to its old commission rate.
“I want Grab to reduce the service fee. [Nearly] 30% is too high,” said Nguyen.
Grab is not the only gig economy company to have been rocked by driver protests in recent years. The likes of Gojek, foodpanda, and Line Man Wongnai have all faced backlash from the people that form the backbone of their business transporting passengers, parcels and food.
Earlier this month, drivers of GoKilat – Gojek’s same-day delivery service, also known as GoSend, in Indonesia – organised a three-day strike to protest a new bonus scheme, which would halve the incentives offered by the firm for five or more deliveries. A driver who used to make five deliveries would now receive 5,000 rupiah ($0.35), instead of 10,000 rupiah ($0.70), KrAsia reported.
“GoSend has made an adjustment to its incentive scheme to provide greater opportunities for more driver partners to obtain incentives and earn additional income during this pandemic recovery period,” a Gojek spokesperson said via email.
Couriers from Grab and Lalamove in Indonesia were reported to have initiated separate strikes following the Gojek drivers’ actions.
The promise and the perils of gig economy
“When [ride-hailing firms] first started their business, they relied on these drivers to build their empire,” says Izzan Faturrahman, an independent researcher who studies Indonesia’s labour practices.
Flushed with venture capital, ride-hailing firms in Southeast Asia, as in other parts of the world, attracted hordes of workers with generous incentives and the promise of flexibility.
In 2017, ride-hailing drivers in Singapore could earn as much as S$6,000 a month, according to a TODAYonline report. In comparison, a Singapore resident who was employed full-time earned S$4,232, according to data from the Ministry of Manpower.
But as companies and their contractor pool grew, incentives fell. And workers realised the platforms were not exactly freeing.
Faturrahman says gig workers are frustrated by the increasingly high incentive targets set by the companies. Many workers have to work between 10 and 14 hours to accumulate enough points to reach these goals. Taking breaks and cancelling orders can affect the number of orders they receive, directly impacting their earnings.
In a report published this year, the International Labour Organisation (ILO) noted that close to half of ride-hailing and delivery drivers in Indonesia said they are unable to refuse or cancel work. The drivers were afraid denying work could negatively impact their ratings, which could result in reduced access to work, lost bonuses, financial penalties and even deactivation of their accounts.
Another report by Flourish Ventures found that 79% of gig economy workers in Indonesia earned less than 1.5 million rupiah ($100) per month in June and July 2020 after the country first imposed lockdowns. To put that number in perspective, the minimum monthly wage in 2021 for businesses less impacted by COVID-19 is $302 in Jakarta.
Workers are also upset by the power imbalance, said Faturrahman. Though they are fundamental to the companies’ business, they lack a seat at the negotiating table, often being told about changes to rules and schemes only after a decision is made.
COVID-19 has further increased worker dissatisfaction. Demand for ride-hailing fell as people telecommuted and tourism came to a standstill in the wake of the pandemic.
While the food delivery market has boomed, more people have entered the workforce, particularly those retrenched amid the economic fallout, says Amar Firdaus, vice-president of Persatuan Penghantar P-Hailing Malaysia, an association of p-hailing — food and parcel delivery using motorcycles — riders in the country with 3,600 members.
The association estimates there are about 60,000 p-hailing riders in Malaysia.
“Companies have been changing their payment schemes. Commissions enjoyed by riders are declining every year,” Firdaus, a foodpanda rider himself, said in a phone interview.
Food delivery has been among the few businesses that are still allowed to operate during Malaysia’s frequent lockdowns. However, shorter operating hours imposed on eateries have affected riders’ income.
“On average, we get 120 ringgit per day. Now, it is around 70 to 80 ringgit per day,” he said.
The food delivery market in Malaysia is dominated by foodpanda and Grab, with AirAsia Food recently entering the fray. Firdaus is hopeful that increased competition would lead to better income for riders.
Food delivery app foodpanda, which saw a driver strike in Malaysia in September 2019 over a new payment scheme, said in a statement it is “constantly talking to our riders, listening to their feedback to provide them with fair and flexible earning opportunities.”
In neighbouring Thailand, the government has stepped in to cap the commission fee charged by food delivery platforms to protect small and mid-size restaurants. However, companies have responded by cutting fees paid to riders by around 20-30%, Nikkei Asia recently reported. The move has upset riders who allege their earnings have fallen by up to 50% to around 500 baht ($16) per day.
Drivers of food delivery company Line Man Wongnai recently organised a protest outside its Bangkok office, demanding better commission and benefits such as insurance. The company has faced multiple protests since March after it reduced the base pay for riders from 62 baht to 50 baht.
In a statement, Line Man said it “consider(s) the well-being of our riders a priority” and is “continuing to invest in resources to deepen our communication with our riders via both online and offline channels” like having an online chat system on its rider app.
Is the gig economy model inherently flawed?
In a virtual panel discussion with the ILO last week, Grab’s group managing director for public affairs, Yew Heng Lim, acknowledged the gig economy has its share of issues to contend with.
However, it has also brought about benefits like giving traditional freelancers more access to work and income certainty, as well as allowing individuals typically left out of the labour force – such as women and disabled people – to find work, he pointed out.
It has also become a “stop-gap measure” for people to tide through job transitions.
“We need to be honest to drivers about what gig work can and cannot do. Is it a career path? Probably not. But can it provide you with certain incomes, can it be a stepping stone, can it allow you flexibility? Yes, it can,” Lim said.
Grab, he said, is “happy to be regulated” as governments “bring with them larger considerations beyond just the gig economy and can really help us guide.”
Until then, drivers can hope being vocal is enough.
Last February in Singapore, Grab reinstated its incentives after drivers criticised its initial plans to replace it with a COVID-19 aid package. Faturrahman believes that Indonesia’s breakthrough motorcycle taxi regulations in 2019 were also a result of a series of protests.
However, observers remain doubtful of the tide turning in the riders’ favour.
For one, the independent nature of these jobs makes it difficult for workers to join forces in demanding better pay and rights, said Gusti Raganata, a lecturer at the Indonesia Open University who studies transportation policy and the digital economy.
“Because they are informal workers, they don’t have the standing to create a formal, legal union,” Raganata said.
Unionising would require substantial reserves to support workers during the strike period, a difficult feat for a group of low-wage workers to sustain, said Nitin Pangakar, an associate professor at the National University of Singapore’s business school.
Consumers are unlikely to align themselves with the drivers as long as prices remain lower than traditional modes of transport and delivery, said Pangakar. “Consumers are selfish. They (have to) identify with the movement. There has to be a tremendous amount of belief (for a boycott to happen).”
The legal recourse
A path to regulating the industry could be hazy, says one legal expert.
Ian Lim, a partner at TSMP Law Corporation who heads its employment and labour team, said there is a lack of clarity over the scale of Singapore’s gig industry.
“The authorities currently estimate that Singapore has more than 200,000 gig workers and freelancers, but getting to grips with the exact numbers can be challenging – does one include full-time employees who also do gig work on the side, for example?
“Nevertheless, it is vital to do so. In an economy with a greying population like Singapore’s, the social cost of having little to no social safety nets in place for this ever-growing segment of the workforce will soon be felt,” he said.
Trying to follow other countries’ rulings is not as straightforward as it seems, he added.
“It will be challenging to apply overseas court verdicts, like the recent UK Supreme Court verdict that Uber drivers are workers, to Singapore. That decision hinged on the fact that UK employment statutes have an intermediate class of ‘workers,’ who are neither employees nor independent contractors, and who have some but not all of the statutory benefits of employees (such as rights to paid annual leave),” Lim said.
Singapore, meanwhile, has no such intermediate class of workers and introducing it would require the Parliament’s intervention. Until that happens, gig workers will continue to be considered non-employed independent contractors.
If anyone could put pressure on the platforms to resolve these conflicts with workers, it could be their investors.
“One factor which might cause gig platforms to address worker discontent so as to prevent further strikes is ESG [Environmental, Social and Governance] concerns. Investors do not appear to be too concerned with the ESG ratings of gig platforms as yet, but with ESG growing in importance globally, this is likely to become an issue sooner rather than later,” said Lim.
Several of these platforms, including Grab and GoTo, are also on their way to going public, which would increase the scrutiny on labour rights and welfare, said Faturrahman.
“Both companies have done a very massive marketing campaign [saying] they champion women and disabled workers,” he added. “If the protests keep happening, they will undermine the goodwill the companies have accumulated.”
Nguyen Thi Bich Ngoc and Quynh Nguyen contributed reporting from Vietnam, and Khairani Afifi Noordin and Yimie Yong from Malaysia.