The billion-dollar question: is the gig economy sustainable?
- Drivers for Southeast Asia’s lucrative food delivery services are merely tiny cogs in a global contest between hugely capitalised giants
- The fast money has obvious appeal but there is precious little security as companies switch strategies and resources at will
The gig economy is capitalism at its most brutal. Everybody wants to create the next “unicorn”, or the next Airbnb or Netflix that disrupts business as usual on a global scale.
However, potential champions often end up like WeWork, its botched initial public offering in August causing its valuation to plummet 75 per cent from US$40 billion to US$10 billion and its long-haired, pot-smoking founder Adam Neumann to leave in disgrace.
Syed Saddiq, the country’s youth and sports minister, recently met with Foodpanda riders.
Muhammad Hajid, a 19-year-old student, was one of those present. He became a part-timer in December 2018, hoping to cover his university costs and help his single mother.
Initially, the job suited him. Last month during his semester break, Hajid clocked up 28 shifts and made more than 300 deliveries. It was hard work but he earned 3,000 ringgit (US$716).
“I was planning to do this full-time because it paid so well,” Hajid says.
However, Foodpanda has now scrapped fixed hourly rates and replaced them with a higher payment per delivery. This introduces greater uncertainty and Hajid expects a reduction in his income.
He says new riders now have the cost of their delivery bags, which were previously free, deducted from their monthly earnings. Transferring this cost to riders highlights the increased competitiveness of the Malaysian market.
Since May 2018, ride-hailing group Grab has also been operating food deliveries. Grab is estimated to be worth some US$14 billion and raised a further US$2 billion in new funding this year.
Meanwhile, Foodpanda’s parent Delivery Hero listed on the Frankfurt stock exchange back in 2017 and has a market capitalisation of about US$8.4 billion.
Riders, meanwhile, are merely tiny cogs in a global contest of hugely capitalised giants. Grab, Gojek and Delivery Hero will switch strategies and resources between markets at will. Politicians and governments are often caught flat-footed by the speed of these changes.
Drivers are dicing with death to deliver food orders in South Korea
Young drivers like Muhammad Hajid may enjoy the fast money but there is precious little security in the gig economy. Payment terms, commissions, bonuses will fluctuate and perhaps even disappear, especially as drones become more sophisticated and reliable. Remember it’s all about the money.
