The Singapore gig economy: Right balance on regulations needed to unlock its full potential, say experts

The Singapore gig economy: Right balance on regulations needed to unlock its full potential, say experts

Deliveroo editions in Singapore
A customer seen making an order on Deliveroo. (Photo: Deliveroo)

SINGAPORE: When Grab and Uber burst into Singapore’s transportation scene in 2013, commuters were presented with the convenient option of hailing a ride at the tap of their fingers, whenever they wanted.

No longer did they have to wait on the sidewalk, or incur a fee by calling for a taxi. It allowed many, including homemakers, to make a side income as ride-hailing drivers.

Despite Uber's exit from Southeast Asia in 2018, a plethora of digital platforms that broker on-demand services connecting workers to customers have since sprouted in Singapore, giving anyone from couriers to caregivers to ability to pick up work at their own time and preference via an app or website. 

These companies and workers are part of the gig economy, a term first coined by journalist Tina Brown back in 2009 where she described the work world as “a bunch of free-floating projects, consultancies, and part-time bits and pieces”. 

READ: Commentary: Five secret boosts a growing gig economy offers Singapore

In Singapore, the closest definition of those who perform these task-based labour are called ‘own-account workers’, or “self-employed persons who are engaged in a trade or business without employing any paid workers”, according to the Ministry of Manpower (MOM). 

The ministry’s Labour Force in 2018 report said that there were 210,800 residents who were own account workers, or 9.3 per cent of all employed residents. More than eight out of 10 of these workers did own account work as their primary job. 

Informally, they are called gig workers, or independent contractors. 

Economic experts and industry players say the rise of the gig economy has been beneficial for both companies and consumers in Singapore. 

But as it continues to grow, the country has to look at enacting the right regulations and gearing the gig industry to offer jobs that lift the skills of workers. 

Grab Food, grab, delivery driver - file photo
File photo of a Grab Food delivery driver (Photo: Jeremy Long)

MORE BANG FOR YOUR BUCK

Among consumers, the gig economy has brought about lower prices and greater variety of products, said Professor Sumit Agarwal from NUS Business School.

Instead of hotels, Airbnb could offer cheaper accommodations to tourists. Instead of hailing a cab, commuters can take a ride on someone else’s car. 

By offering alternative products and services to consumers, gig economy companies have added to the competition in the industries they operate in, he said. 

But rather than conclude that the traditional service providers such as taxi companies or hotels have lost out, observers said the digital players have pushed them to improve their performance.

“With disruptions, incumbents tend to up their game,” said Ang Hin Kee, the deputy chairperson of the Government Parliamentary Committee (GPC) for Transport. “Taxi operators are doing more to compete, from partnering (other companies), launching their own apps, and even improving terms to retain their drivers as well as enhancing privileges for commuters.”

READ: Commentary: The curse of late payments plaguing freelancers

The gig economy has also paved the way for individuals and small companies to become more entrepreneurial, said Prof Agarwal. Resources that were inefficiently used – the car sitting idle in the parking lot, the spare rooms in the empty nester’s apartment – can now be tapped on to make money. 

He gave the example of how restaurants stand to benefit, despite reports of restaurant owners complaining about high commission fees.

Cooks were often only busy during lunch and dinner hours, but now they are kept occupied throughout the day because orders stream in the afternoons and late nights too, Prof Agarwal said. 

Hawker Chan char siew
File photo of char siew sold at a Singaporean restaurant.

STRIKING A BALANCE ON REGULATIONS

But for benefits of the gig economy to play out completely, the government has to first guarantee a level playing field, the experts said. 

Right now, countries and cities are still figuring out how best to protect gig economy workers.

In April 2019, the European Parliament approved rules on minimum rights for gig workers, including the need to provide free training and keeping workers informed about their working condition from the beginning. 

In a more drastic move, the US state of California passed a bill in September last year requiring gig economy companies such as Uber and Lyft to treat gig workers as employees and grant benefits like paid time off and minimum wage. 

READ: Uber sues California over gig-economy labor law

So far in Singapore, some of the initiatives mooted to help freelancers include the Tripartite Standard on Contracting with Self-Employed Persons, a set of voluntary employment practices released in March 2018 on contracting freelancers.

Starting this year, freelancers hired by the Government will have a portion of their fees automatically transferred to their MediSave accounts under the Contribute-As-You-Earn (CAYE) pilot scheme, although there are no plans yet to extend this to the private sector. Self-employed individuals can also purchase an insurance policy by NTUC Income and Gigacover for long-term medical leave.

Instead of heavy-handed regulations, industry players and observers said the authorities should create an environment that allows for free entry and exit into the market. 

READ: Nearly 500 companies adopt tripartite standard for self-employed

Eventually, some legislation might be required but the Government “must be careful not to choke innovations and options for the worker”, Mr Ang, who is also the National Trades Union Congress’ (NTUC) freelancers and self-employed unit director, said. Offering employee benefits such as paid time off could translate “into costs at some end”, like higher rental fees.

Mr Ang, who is part of the tripartite workgroup that studied the issues faced by those self-employed, said that Singapore should follow through with the group’s recommendations

Founder of ride-hailing firm RYDE, Terence Zou agreed that there should be a “light-touch approach” towards regulating the gig economy, to allow new entrants to grow without being pushed down by cost. 

Ultimately, competition improves the products end-users get, he pointed out. 

Certain regulations such as ordering employers to insure freelancers or offer paid time off would not make sense as they can decide when to walk away from a job or take the day off, said Walter Theseira, a labour economist with the Singapore University of Social Sciences.

However, there is still room for more protection of freelancers, Dr Theseira, who is also a Nominated Member of Parliament, said. Laws on CPF special account contributions, the expansion of CAYE and work injury insurance that is tailored to specific tasks should be looked at, he said. 

The authorities must also ensure that workers are not abused in a way that they feel “compelled to work all the time in order to remain in good standing”.

CPF Maxwell Service Centre
CPF Maxwell Service Centre. (Photo: Central Provident Fund Board)

For example, if a driver makes a reasonable income only by hitting the incentive targets, and to do so they need to work 12-hour shifts every day, the driver should be counted as an employee, he said. Benefits such as paid time off should be granted. 

Across the board, the larger gig providers in Singapore – Grab, Deliveroo, Foodpanda and Gojek - have introduced several forms of protection and perks, ranging from personal accident insurance to fuel discounts. 

When asked about whether they would implement a social security programme similar to CAYE, both Grab and Deliveroo said they are in discussions with the authorities.

Eventually, platforms that don’t see the importance of employee welfare will fail, said NUS sociologist Vincent Chua, as workers gravitate towards those that provide benefits.

Another worry about the gig economy is the possibility of stymying the growth of these workers, given that their jobs – be it driving or delivering food – are relatively easy, nor would they be motivated to go for courses if they can use the time to make a quick buck instead.

In response to these concerns, the platforms cited the various training programmes and career coaching services made available to their riders and drivers, while the flexibility of the work gives them the option to upskill themselves at their own time.

In fact, “a career in ride-hailing imparts a myriad of lifelong skills to drivers”, a spokesperson from Gojek said, as they develop skills in areas such as time management and customer service – “skill (that) build competence and confidence…and beneficial for any industry”. 

Commuters pass by a Gojek advertisement in Singapore
Commuters pass by a Gojek advertisement in Singapore Mar 4, 2019. (Photo: Reuters/Edgar Su)

At the end of the day, it is up to the workers to decide what their long-term career goals are, the experts said. 

Gig workers need to be aware of what these jobs entail, said Dr Chua. “Do gigs provide job ladders...Or are they ultimately dead end jobs?” 

WHAT’S NEXT FOR THE GIG ECONOMY

After working as a public hospital nurse for five years, Lynn Ng left her job in August 2018 to broaden her skill set.

Instead of jumping into another full-time role, the 27-year-old decided to go freelance and signed up with on-demand healthcare platform Jaga Me the following month. She was curious about what nursing in a home care setting was, and it gave her the time to travel abroad as well.

Lynn Ng left her full-time job as a nurse and signed up for healthcare platform Jaga Me
Lynn Ng left her full-time job as a nurse and signed up as one of on-demand healthcare platform Jaga Me's freelancers. (Photo: Rachel Phua).

Fears over her erratic financial situation aside, Ms Ng is “definitely happy” with her choice to take a career risk. She has learnt more in her current position, having to conduct physical examinations and assess patients on her own. Those were the doctor’s duties when she worked in the hospitals, she said.

It is professionals like Ms Ng that the gig economy should be geared towards, said Indranil Roy, an executive director in the human capital practice at global consultancy Deloitte.

“A project-based economy…is where the level of upskilling of people is going to be fastest,” he said. 

Mr Roy explained when more specialised jobs are available on gig platforms, workers can choose the various tasks they want to try their hands on, work on it for a couple of months, learning something new, and move on to the next project. 

Otherwise they would be stuck in one department, solving “one problem over and over again”, he said.

Economic growth will also speed up if Singapore cultivates a blended workforce - a greater number of freelancers and fewer full-time, permanent employees compared to the current proportion - as firms can adjust more quickly to disruption, Mr Roy said.

For example, a traditional small business can change their business model sooner if they are able to have immediate access to the software developers or graphic designers they need for the purpose of moving their processes online, which may only last a short period of time. 

Companies and professionals in Singapore first need to see freelancing as a viable option, he added. Right now, both parties prefer hiring and being hired as permanent, full-time employees, while many human resource departments are still unable to create alternative pay structures and recruitment policies. 

If Singapore strives towards creating flexibility in the labour market and systems that match companies to highly-skilled individuals, “then I’m very optimistic” about the gig economy, said Mr Roy. 

In March 2020, the inaugural CNA Digital Economy Leadership Summit 2020 will bring together some 200 key decision makers from Government, diplomatic circles and the private sector from around Asia, to explore key issues that include: How to grow and innovate in a digital economy, as well as how to manage talent and ensure sustainability in the digital economy. 

More details are available at: cna.asia/leadership-summit

Source: CNA/rp

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