Give e-hailing drivers more to curb shortage, say economists

 

The country is facing an imbalance in the supply and demand of e-hailing drivers.

GEORGE TOWN: Giving e-hailing drivers a bigger share of the fare is one way to attract more people to join the industry, say economists.

Commenting on transport minister Wee Ka Siong’s statement that the surge in e-hailing fares was due to a spike in traffic volume and a lack of drivers, economists Yeah Kim Leng and Geoffrey Williams agreed that such companies could persuade more drivers to join them if they offered higher commissions.

Currently, e-hailing firms pocket about 20% from each driver’s fare.

Sunway University’s Yeah said while e-hailing firms would need to pay more to increase the pool of drivers, increasing the fares would push customers to opt for taxis or public transport.

“Besides raising the amount a driver gets, e-hailing firms may consider providing additional benefits, such as EPF and health insurance, to increase the attractiveness of gig work as a longer-term employment option,” he said.

However, he stressed that for e-hailing firms to be sustainable, the profits they generated would need to cover operating costs, meet the capital investment and financing costs, as well as shareholders’ expectations.

Yeah said the exit of numerous e-hailing firms in Malaysia was a reflection of the difficulty they faced in creating a sustainable business model.

Malaysia University of Science and Technology’s Williams concurred with Yeah on the solution to the current shortage of drivers, stating that “the way to get more drivers would be to share more of the fare”.

“That means higher cost to customers, which will result in fewer customers. We will need to see how that works out for them and whether customers will still like the convenience and security of e-hailing or was it just the cheap fares that attracted them,” he said.

Williams also pointed out that while e-hailing firms might say that they had “fewer drivers”, the drivers were gig workers and not employees.

“(These) drivers are not sacked. What they mean is that this option is not attractive and perhaps it was only attractive during the pandemic when people had fewer opportunities,” he said.

Ride hailing firm Grab has also noted that it currently has fewer drivers on the road. It stated on Tuesday that as of mid-May, the number of driver-partners on its platform was less than 70% of the pre-pandemic levels.

The company was commenting on the price fluctuations that customers have been observing of late, which Grab also attributed to the increase in traffic congestion and various regulatory requirements which hindered new drivers from coming onboard fast enough to keep up with demand. - FMT