Doing Business

Southeast Asia’s Delivery Workers: Low Wages, High Risks, and the Gig Economy Struggle due to “Supply and Demand mismatch”

Trường Lăng

November 11, 2023

Doing Business

Southeast Asia’s Delivery Workers: Low Wages, High Risks, and the Gig Economy Struggle due to “Supply and Demand mismatch”

Trường Lăng

November 11, 2023

With low wages, high accident risks, and the algorithmic demands of the employer, running around the rain-soaked streets of Ho Chi Minh City (Vietnam) has quickly worn out 35-year-old Linh Nguyen. She is part of an overworked delivery workforce that is interconnected in the seasonal economy across Southeast Asia.

(ShopeeFood and GrabFood Delivery Crates on a Row of Motorcycles in Kuala Lumpur.)

Linh said, there have been blessed days when work flows consistently to her phone, and kind customers have uplifted her spirits. But on bad days, her body aches from continuous driving for 10 hours, and the monthly income is only a meager 240-280 USD. This amount is not sufficient to cover the risks on the road and compete for customers.

Linh, a ShopeeFood driver, stated, “With the earnings I make, I can only cover my rent and monthly expenses. I cannot support my parents”. After six months, she is currently seeking new employment.

Driven by Asia’s online ordering trend,  which has seen significant growth during the pandemic, major companies from Grab and Shopee in Singapore to Gojek in Indonesia and Line in Japan have transformed consumer habits by connecting, moving, delivering, and creating millions of new jobs.

From the congested traffic streets of Bangkok to the bustling roads of Jakarta and the narrow lanes of Ho Chi Minh City, now all stand out day and night with the distinctive jackets of delivery service companies, handling food, shopping, parcels, and even people throughout the city.

This field has provided employment opportunities for women seeking flexible part-time jobs, a second job for students, and new opportunities for low-skilled workers who may be willing to leave their jobs at factories.

However, critics argue that it is also creating a race to the bottom, creating a culture of less responsibility from employers, poor working conditions, excessively high platform fees, and a work environment in which too many people are competing with each other for too few orders. However, companies with delivery applications are becoming increasingly wealthy. They charge fees from delivery drivers, as well as the stores and restaurants that they serve.

According to the Modor Intelligence Report, in Vietnam alone, the ride-hailing sector is predicted to generate around 1 billion USD this year and is expected to rise to 2.61 billion USD by 2028. The research indicates that Thailand’s ride-hailing market is valued at 2.26 billion USD and is projected to reach 4.6 billion USD within the same timeframe, while Indonesia’s market is valued at 2.67 billion USD and is anticipated to exceed 4.66 billion USD.

However, many contracted shippers are becoming increasingly dissatisfied with their work as freelancers without labor protections, having to bear the risks of navigating through hazardous roads.

“For many drivers nowadays, it’s really difficult to earn a decent income,” said 26-year-old Gojek driver Khang Nguyen from Ho Chi Minh City, speaking to This Week In Asia.

Khang left his job at a factory three months ago to embrace the flexibility of the gig economy, but he’s ready to quit after receiving only 5 million VND (205 USD) per month for the strenuous work of 11 hours a day. Furthermore, he mentioned, “At night, there are some really frightening deserted roads”.

A 2023 survey by the global salary comparison website Sala Explorer reveals that drivers using ride-hailing apps in Vietnam, working on a standard 48-hour week, earn an average of 4.91 million VND per month after deducting expenses. This figure is slightly higher than the minimum wage of 4.68 million VND.

However, this minimum wage, which has gradually increased to its current level from 4.4 million VND in 2020, still does not apply to independent freelancers in Vietnam, classified as independent contractors and therefore they are obligated to work longer hours.

In addition to low income, those participating in this gig economy report that they do not receive many benefits afforded to regular employees, such as employer contributions to social security, maternity and paternity leave, annual leave, or overtime pay – along with other benefits like food and transportation allowances.

There is no comprehensive data on workers in the delivery model (shipper) in Vietnam, but it is estimated to be around 600,000 people, according to estimates by the Investment newspaper sponsored by Vietnam’s Ministry of Planning and Investment.

In Vietnam, drivers using applications often only receive accident insurance. Meanwhile, according to a report from the Vietnam General Confederation of Labor, access to social welfare programs and health insurance remains low for young drivers.

In summary, this could lead to serious consequences.

An Ha, an IT student at a public university in Hanoi, works as a part-time Grab driver to financially support his parents in the countryside. He says, “The traffic here operates on the principle of being fast and nimble. Even when I don’t make mistakes, accidents can still happen”. Ha has purchased his own health insurance and pays extra for the months when he works more.

Responding to questions about protective measures for shippers, Grab stated in a statement that they provide “a comprehensive insurance package” of welfare programs, including “free job-related insurance for our partners”.

Foodpanda also stated that they provide personal accident insurance for all shippers.

Singapore, the hub of major platforms like Grab and Shopee, has shown a willingness to address some of the issues that have arisen among platform workers. One approach is to allow representative agencies – similar to labor unions – to operate so that shippers can have better conditions.

Similarly, five shippers died on Singapore’s roads within 18 months. Last year, the Singapore’s government sought to enhance labor protection by establishing a program for workers’ injury compensation. Ultimately, it will reimburse 75% of the mandatory contributions for workers under 30 years old, known as the Central Provident Fund, in their first year of employment.

While welcomed, shippers note that the downward trajectory of income post-pandemic is making this gig economy unsustainable in one of the world’s most expensive cities.

Alvin Tan, 36 years old, recently decided to work part-time after activating the app at 10 a.m. and having to wait nearly 12 hours before receiving his first order.

“There are a lot of new shippers. The supply and demand are mismatch”, he said. “Recently, I only completed a few orders each day, perhaps a maximum of five orders”.

In Thailand, where the cost of living is lower but competition is fierce like in Singapore, tech-based drivers are routinely attacked by angry taxi drivers for picking up passengers too close to their gathering locations.

But the apps are also a lifesaver for many residents who are glued to the internet and feel traffic is too congested to venture out.

Former taxi driver – Paisit Jetkranboonchoo, who earned the title of “Hero” by running 300 trips in a month, said that Grab has revolutionized how he works by actively seeking customers, with rewards for extra effort and overtime.

“They even reward you when you drive in the city during peak hours,” he told This Week in Asia.

While he pays for his own insurance, Paisit said that the freelance job suits him well and comes with “very good perks,” including discounts for coffee, gasoline, and etc.“You can installments through Grab to get a new phone.  I’m thinking I’ll get an iPhone soon … the installment amount is only 100 baht (2.70 USD) per day.”
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Source: SCMP.

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