SINGAPORE - Compensation for workplace injuries and Central Provident Fund (CPF) payments are on the cards for cabbies, private-hire car drivers and freelance delivery workers who use apps.
In a major move to uplift more than 73,000 platform workers here, companies that hire them will have to provide standardised insurance protection for those who get hurt during working hours.
As for CPF payments, they will be made compulsory only for those below 30 years old. For everyone else, there is a choice to opt in or not.
The new policies will kick in in the latter half of 2024, at the earliest, after the Government on Wednesday accepted recommendations made by the Advisory Committee on Platform Workers.
The committee was tasked to look at bolstering gig workers’ protection in 2021 and comprises government and industry players, as well as workers and those in academia.
In a nearly 60-page report, the committee said the tighter insurance and CPF measures are so that platform workers receive basic protections that correspond to the level of control platform companies have over their work.
They currently fall in a grey area between full-fledged employees and self-employed people as they can decide the number of hours they work, but cannot set their own prices or build their own client pool.
The changes will bring their basic protections more in line with employees in other sectors, who are currently protected under the Work Injury Compensation Act (Wica) and must co-contribute to CPF.
With the change, platform workers’ insurance will be mandated to cover the same three areas under Wica, when insurance for them right now largely depends on the goodwill of the platform company and is uneven across different platforms. The three areas are: medical expenses, income loss and lump sum compensation for permanent disability or death.
Meanwhile, the CPF co-contribution percentage will take five years to reach parity with other sectors, the committee said, starting from a lower point and increasing by 2.5 per cent to 3.5 per cent year, barring major economic events.
The starting lower point for platform workers in 2024 has not yet been determined, with the committee wanting to stay flexible.
Employees under 55 in other sectors currently pay 20 per cent of their salary to CPF while their employers contribute another 17 per cent. This will be the end goal after five years for platform workers.
Using 2021 figures as a guide, the change will immediately affect the roughly 4 per cent of private-hire car drivers and 31 per cent of delivery riders who are below 30, a group the committee said needed the most help in terms of housing.
Some of the increased cost will be passed on to consumers. Adviser to the committee, Senior Minister of State for Manpower Koh Poh Koon, said market forces will present a natural check to profiteering practices or significant fare hikes.
He said: “Consumers exercising their power to choose will constrain any risk of the platforms trying to overprice. Drivers also choose platforms that offer them more work.”
He noted that CPF is also applied to only about 40 per cent of drivers’ earnings, after their expenses are subtracted.
This relatively small sum will be shared among platforms, workers and users, and the full CPF increase spread out over five years.
Committee chairman Goh Swee Chen said some 91 per cent of users in a Singapore Management University survey were also sympathetic to platform workers and indicated their willingness to pay more for services to offer them better protection.
The median amount they were willing to pay in excess was 10 per cent, which should be more than any fare hikes passed on to consumers.
The new CPF policy has also caused some disgruntlement among major platform companies here, which believe the exemption of street-hail taxi drivers from the CPF scheme might give taxi companies an unfair cost advantage.
Grab, particularly, said in a statement that street-hail taxi and third-party logistics companies should also be included as they similarly engage gig workers.
“Excluding them will result in an unlevel playing field and may lead to price and market distortion,” it added.
When asked, vice-chair of the committee Danny Quah said street hail was a different model of operations as drivers are not directed by an app on where to pick up passengers and companies do not take a cut of each transaction.
“If you were to treat them the same, that would not be fair,” he said. “Precisely by separating them, we can get both to operate on a level playing field.”
Ms Goh said the committee wanted to begin with compulsory CPF for only those below 30 in the first year of the policy to target “those who need it most”.
During consultations with more than 20,000 platform workers over the past year, about half wanted CPF while the other half did not, with the young more likely to want it so that they can finance their homes.
She said: “We have to focus on where the need is greatest, and our assessment is that this is at the younger age.”
Dr Koh said: “The younger group has a longer runway to compound interest over time, so the CPF makes the biggest impact for them. For the others we have the assumption that they have been working all these years, sometimes they have a different career. We want to provide them with the flexibility when it comes to retirement savings.”
The difference in housing protection for young platform workers when compared to their peers is significant.
A young full-time rider is estimated to be able to accumulate just 10 per cent of CPF savings that an employee with similar earnings in other sectors can expect to set aside.
He is also able to finance only 20 per cent of housing loans using his CPF, compared with his peers who can do so fully.
Additionally, the committee also wants platform companies to be able to deduct Medisave contributions from the workers as and when they receive their pay, compared to the current approach where workers contribute annually as a lump sum.
The committee said workers often ran into problems of liquidity when they had to do so, leading to less healthcare protection for them.
A final recommendation by the committee involved stronger representation of workers, and the committee said platform worker associations must have ways to enter into legally binding agreements with platform companies.