A GrabFood delivery driver in Singapore.
Bryan van der Beek | Bloomberg | beautiful pictures
Southeast Asian tech giants Grab and gojek said they were “supportive” recommendations are made by an advisory committee expanded protection of self-employed workers in Singapore starting 2024.
In Singapore, people who work on platforms or gigs, often ride-hailing or food delivery drivers, have until now been considered self-employed. As a result, they do not receive an employer contribution to the Central Provident Fund, the national pension savings scheme.
As of 2020, the city-state’s Department of Manpower estimates that such workers make up about 3% of the permanent workforceor 79,000 people.
While the recommendations, adopted by the government on Wednesday, say these workers should not be classified as employees, they do regulate platforms that have a significant degree of management control over workers. Performers must provide them with certain basic protections including CPF contributions and disability compensation starting in 2024.
Under the CPF measure, both platform employees and platform companies such as Grab, Gojek, Foodpanda and delivery will need to contribute at the same rate as workers and employers. This applies if the employee is under 30 in the first year of implementation, while it is on a voluntary basis for those aged 30 and over.
For example, employees aged 55 and under who are Singapore citizens and permanent residents can have to contribute 20% of their salary for CPF while their employer contributes 17%.
Increased CPF contributions over five years are expected to be made in phases, unless major economic disruption warrants a longer timeline.
Platform companies are also required to provide the same scope and level of work injury compensation to which employees are entitled.
Concerns about rising costs and competition
A Grab spokesperson said current macroeconomic conditions such as inflation “along with potentially high implementation and operating costs” necessitate a step-by-step implementation of the recommendations.
The spokesperson also said that with the challenge of being one of the first platforms to roll out work-related injury and loss of income insurance, it will “required a concept test involving a group of workers smaller across platforms.”
“We will follow these considerations to ensure minimal impact on our partners’ income and consumer prices,” a Grab spokesperson said in an emailed comment.
Gojek told CNBC it also “supports” the review, and said the recommendations will build on their existing driver benefits program.
“However, in practice, CPF contributions will mean less take-home income for our driver partners. Implementation of these recommendations will also impact the costs of our driver-partners. platforms and consumers, and driver-partners may experience lower ride demand,” a Gojek spokesperson told CNBC via email. Gojek also says rising costs are one of the challenges.
Grab said the measures should be applied to all companies in the industry for the sake of fairness.
A Grab spokesperson said: “Grab believes that third-party logistics and taxi companies should also be protected under the recommendations because they similarly exploit contract workers with similar needs. protection at work for their business requirements”.
“Excluding them would lead to an uneven playing field and could lead to market and price distortions. It could also encourage other industry players to innovate and adjust their business models. following the exclusion guidelines, which can then render the recommendations ineffective.”
— CNBC’s JP Ong contributed to this report.
