Asia Economy

Grab, Gojek are 'supportive' of Singapore's move to expand job protection for gig workers

Key Points
  • Southeast Asian tech giants Grab and Gojek said they are "supportive" of recommendations made by an advisory committee to expand gig worker protection in Singapore starting in 2024.
  • These recommendations include offering injury compensation and CPF contributions to these self-employed workers.
  • Grab calls for the measures to be also applied to all players that engage gig workers, so as to ensure a level playing field.

In this article

A GrabFood delivery rider in Singapore.
Bryan van der Beek | Bloomberg | Getty Images

Southeast Asian tech giants Grab and Gojek said they are "supportive" of recommendations made by an advisory committee to expand gig worker protection in Singapore starting in 2024.

In Singapore, platform or gig workers, often ride-hailing or food delivery drivers, have thus far been considered self-employed. As a result, they do not receive employer contributions to the Central Provident Fund, the national pension savings scheme.

As of 2020, the city-state's Ministry of Manpower estimated that such workers made up about 3% of the resident workforce, or 79,000 people.

While the recommendations, accepted by the government Wednesday, said these workers should not be classified as employees, they stipulated platforms that exert a significant level of management control over gig workers must provide them with certain basic protections including CPF contributions and injury compensation starting in 2024.

Under the CPF measure, both platform workers and platform companies such as Grab, Gojek, Foodpanda and Deliveroo will need to make contributions at the same rate as employees and employers. This applies if the worker is younger than 30-years-old in the first year of implementation, while it is on a voluntary basis for those aged 30 and above.

For example, employees aged 55 and below who are Singapore citizens and permanent residents are required to contribute 20% of their salary to CPF while their employers contribute 17%.

Increased CPF contributions over five years are expected to be phased in, unless major economic disruption warrants a longer timeline.

Platform companies are also required to provide the same scope and level of work injury compensation as employees are entitled to.

Concerns about rising costs and competition

A Grab spokesperson said current macroeconomic conditions such as inflation "coupled with the potential high operational and implementation costs" requires gradual implementation of the recommendations.

The spokesperson also said that with the challenge of being one of the first platforms to implement work injury compensation and income loss insurance, it would "require a trial of the concept involving a smaller group of workers across platforms."

"We will be guided by these considerations to ensure minimum impact on our partners' earnings and consumer prices," the Grab spokesperson said in emailed comments.

Grab reports its first-quarter earnings; net loss narrows
Grab reports its first-quarter earnings; net loss narrows

Gojek told CNBC that they, too, are "supportive" of this review and said the recommendations will build on their existing driver benefits program.

"Practically however, CPF contributions will mean less take-home earnings for our driver-partners. Implementing these recommendations will also impact costs to platforms and consumers, and driver-partners may experience lower demand for rides," a Gojek spokesperson told CNBC via email. Gojek also cited rising costs being one of the challenges.

Grab said the measures should be applied to all industry players for the sake of fairness.

"Grab is of the view that street-hail taxi and third-party logistics companies should also be covered under the set of recommendations as they similarly tap on gig workers with the same workplace protection needs for their business requirements," the Grab spokesperson said.

"Excluding them will result in an unlevel playing field and may lead to price and market distortion. It may also encourage other industry players to innovate and fit their business models to the exclusion guideline which may then render the recommendations ineffective."

— CNBC's JP Ong contributed to this report.