Fewer full-time platform drivers on Singapore’s roads as employee jobs beckon

Major platform companies Gojek and Grab have found that private-hire drivers are thinner on the ground now than before the Covid-19 pandemic.

"While the ride-hailing industry has shown strong signs of recovery, the active number of private-hire drivers has not returned to pre-pandemic levels," a Gojek spokesperson told The Business Times.

With more commuters using ride-hailing services again, "the number of private-hire drivers on the road has not kept pace with demand", she added.

There were 38,100 private-hire drivers using online matching platforms in 2022, comparable with 38,200 in 2020, according to data from the Ministry of Manpower (MOM).

But fewer such drivers are doing so as their main job: 30,800 in 2022, down from 34,400 in 2020. The difference has been made up by a rise in drivers doing so as a secondary job.

To woo workers, platform companies have referral programmes and new joiner schemes, with perks such as commission rebates and bonus earnings.

Gojek is working with government and industry to expand the driver pool, such as by "encouraging stakeholders to consider introducing new categories of Certificate of Entitlement and extending the eligibility criteria for private hire car driver's vocational licence holders", said its spokesperson.

To meet demand with a smaller pool, the industry is using data analytics to direct riders and drivers to more popular areas. Grab has also rolled out a ride-sharing service so drivers can ferry more passengers on each trip.

Labour economist Walter Theseira said that in earlier years, the "explosive growth in own-account workers" was driven by "huge subsidies" as platform companies strove to grow.

"As platforms have shifted from a growth to profitability phase, they've also significantly cut payments to own-account workers, which makes it less attractive," said Prof Theseira, associate professor of economics at the Singapore University of Social Sciences.

Employee jobs grow more attractive

The fall in platform drivers comes amid an overall cooling of interest in own-account work.

In 2022, year-on-year growth in resident own-account workers -- including not just drivers but real estate agents, insurance agents, tutors, working proprietors and others -- slowed to 0.4 per cent, down from 5.7 in 2021 and 9.2 per cent in 2020.

As at June 2022, 12.6 per cent of resident workers who did regular own-account work in the past year had moved into full-time employee jobs instead -- the highest such level on record.

Noted MOM: "This suggests that notwithstanding the motivations for own-account work, a higher share would move to full-time employee jobs if there were opportunities to do so."

Prof Theseira said the change in own-account worker numbers "is really the result of the market finding a sustainable equilibrium, and it will ebb and flow depending as well on whether outside market opportunities are better".

In a tight post-pandemic labour market, platform businesses must compete with the attractiveness of regular jobs in staff-strapped service industries such as food and beverage (F&B) and retail.

UOB senior economist Alvin Liew noted that resident unemployment eased to 2.5 per cent in the first quarter, from 2.8 per cent in the three months prior.

"Our view is that the labour market in Singapore remains tight, especially for the in-person service industries," he said. He added that the recovery in air travel and inbound tourism will benefit the service sector, where high demand for labour has "kept wage growth in these industries elevated".

Market demand aside, lower-wage employees in the service sector can expect higher pay with the expansion of the Progressive Wage Model and an extended local qualifying salary requirement.

In contrast, gig workers' take-home pay is expected to fall because of new rules aligning their Central Provident Fund (CPF) contribution rates with that of employees. Previously, own-account workers and platform companies did not have to contribute to workers' CPF Ordinary Account and Special Account savings.

Lim Huishan, general manager for FastJobs Singapore and Philippines, told BT: "As the high bonuses and lucrative payouts for platform gig workers moderate down, and salaries for the conventional roles increase, pay is going to be less of a factor for job seekers deciding between doing gig work or full-time work."

Data from the job search portal showed that sales, retail, and marketing listings rose 56 per cent year on year in the first quarter of 2023, while hospitality and F&B openings grew by 17 per cent.

In FastJobs listings, pay rose 20 per cent for sales assistants to S$2,400, and by 14 per cent for service crew and 9 per cent for cooks, both to S$2,500.

In contrast, MOM data showed the median income was S$2,000 for platform-based delivery workers and S$2,500 for platform-based private-hire drivers in 2022.

Workers with delivery and ride-hailing platform experience tend to apply for roles such as warehouse assistants, delivery drivers, retail assistants, and service, according to FastJobs.

While gig work has been attractive for its flexibility and control over work schedules, ongoing job redesigns by traditional employers -- offering more flexible work schedules -- will also lead to "a convergence in the market", Lim suggested.

In spite of the fall in private-hire drivers, however, platform companies report stable interest in delivery work. Said a spokesperson for foodpanda: "Our delivery fleet has remained largely stable since 2020... We have not observed any major changes in the size of our delivery fleet since reopening."

Grab's food delivery arm has also reportedly seen a stable supply of riders.

Just as with ride-hailing, however, an increasing share of own-account delivery riders are doing so as a secondary job: more than three in 10 in 2022, up from about two in 10 in 2021.

The current labour market tightness does not appear cyclical and could persist in the near term, said Trevor Yu, an associate professor in leadership, management and organisation at Nanyang Technological University's Nanyang Business School. This "would likely hit the platform companies hard in terms of increasing operating costs".

Amid high labour costs, platform companies must "choose between further rationalisations on the back end or passing increased costs down to their consumers", he added.

Said Prof Theseira: "I expect that own-account work will need to pay much more to continue attracting labour, and some business models may simply be untenable, such as low-value deliveries."

With more commuters using ride-hailing services again, the number of private-hire drivers has not kept pace with demand, says a Gojek spokesperson.