Grab boosts driver and delivery worker welfare with $4 million annual investment

Grab will invest $4 million per year on welfare for drivers and delivery workers who use its platform in Singapore by 2025, the ride-hailing and food delivery firm said on October. Gojek, a ride-hailing company, also intends to enhance its benefits package for drivers in Singapore in the coming months, according to a spokesman.

The improvements come as there is growing concern about the safety of private-hire drivers and independent delivery workers, sometimes known as platform workers.

The announcement comes at a time when the gig economy is facing increased scrutiny worldwide. As more individuals turn to platform work for flexible employment opportunities, governments and companies are grappling with how to provide adequate protections and benefits for these workers. Grab's initiative represents a significant step towards addressing these concerns in the Singapore market.

Grab stated that its yearly $4 million outlay from its operational budget would be utilized to pay the company's existing GrabBenefits program as well as additional incentives that will be introduced on January 1, 2025, as part of rewards scheme upgrades.

The additional benefits include free yearly flu vaccinations and subsidies for general practitioner (GP) and telemedicine consultations, which are limited to two visits per year and cost up to $45 each session. These are only available to drivers and delivery riders in the top two tiers of Grab's rewards scheme.GrabBenefits, which has been in place since 2018, already offers perks like as gasoline reductions and insurance for extended medical leave.

Industry experts have praised Grab's move, noting that it sets a new standard for platform companies in the region. The comprehensive nature of the benefits package, which includes both immediate health concerns and long-term financial security, demonstrates a holistic approach to worker welfare. This could potentially influence other companies in the sector to follow suit, creating a ripple effect that improves conditions for gig workers across Southeast Asia.

Grab stated that the new bonuses build on current advantages and are intended to address issues voiced by drivers and riders during recent focus groups. These worries include increased medical costs and physical illnesses such as backaches, which are often not covered by doctor's visits.

Grab, which had a revenue of US$2.36 billion (S$3.06 billion) in 2023, is not the only platform that provides incentives to drivers and delivery personnel out of goodwill. Gojek and Foodpanda provide gasoline reductions and medical subsidies, among other incentives.

All Gojek drivers may now see a GP at a discounted fee of $12 each consultation, with no restriction on the number of appointments. Grab provides the same service, and its new subsidy of up to $45 each visit for two GP appointments per year is in addition to that. On October 1, Gojek also launched a new fuel savings plan in response to driver demands for bigger upfront discounts.

The competition between platform companies to offer the most attractive benefits package is likely to intensify in the coming years. This rivalry could lead to significant improvements in the overall welfare of gig workers. However, some critics argue that these benefits, while welcome, do not address the fundamental issue of job security and consistent income that many platform workers face. The challenge for companies like Grab will be to balance the flexibility of gig work with the stability and protections traditionally associated with full-time employment.

Grab stated that the modifications to its benefits program are intended to supplement the new labor safeguards under the Platform Workers Act. The Act, which takes effect on January 1, 2025, provides platform workers with employee-level Central Provident Fund contributions and work injury compensation insurance.

"Some of these overlap with what we voluntarily provide today, so it makes sense for us to relook our existing benefits," Grab Singapore managing director Yee Wee Tang said.

He pointed out that the Platform Workers Act addresses on-the-job injuries and long-term savings, but Grab's benefits scheme focuses on more urgent demands like healthcare and everyday costs.

It is unclear how much of Grab's $4 million annual budget would be spent on the new bonuses. The Nasdaq-listed business declined to comment. It also failed to disclose how much money it presently spends on the existing GrabBenefits program.

Mr Li Jianggan, CEO of venture capital and research firm Momentum Works, feels the newest enhancement to Grab's perks system is a tactic to secure workers' loyalty.

As higher levels of CPF payments under the Act may result in lower take-home earnings, some drivers and passengers may contemplate continuing to work on platforms. Mr. Li continued: "Since driver supply is always a key issue in Singapore, Grab needs to provide additional benefits to influence them to stay."

The implementation of these benefits also raises questions about the long-term sustainability of the gig economy model. As companies invest more in worker welfare, they may face pressure to increase prices for consumers or reduce their own profit margins. This could lead to a reshaping of the gig economy landscape, with some platforms potentially consolidating or exiting the market. The success of Grab's initiative will likely be closely watched by industry observers and policymakers alike, as it could serve as a model for balancing worker protections with the flexibility and efficiency that have made platform work attractive to many8.

Mr Ariff Salleh, 42, who has been delivering meals for Grab since 2019, believes the additional incentives that Grab is giving would assist delivery riders like him. "We are dealing with food, so the (free) flu vaccination is definitely a plus."

Under the Platform Workers Act, platform workers will be able to create representative entities known as platform work associations, which will have legal rights comparable to trade unions. The National Trades Union Congress has stated that once the new law goes into effect, it will organize platform work associations.

To encourage Grab drivers and delivery workers to join these groups, the business has announced that it would cover six months of membership expenses for new sign-ups through its upgraded GrabBenefits programme.

When asked if this is a step towards NTUC acquiring the requisite mandate to formally represent Grab workers in the future, Mr Yee stated that platform worker associations are still in their early stages and that further specifics must be worked out.