JAKARTA: Millions of Indonesian ride-hailing drivers would receive major increases to financial and social benefits under a draft decree being considered by President Prabowo Subianto, two sources said, threatening the profitability of ride-sharing platforms in their largest market in Southeast Asia.
Prabowo is under pressure to respond to drivers’ demands for better pay and conditions, particularly after their involvement in widespread student-led protests in August demonstrated the political clout of the sector’s workforce.
The debate also comes amid concerns about driver welfare as a result of a potential merger between the two largest ride-hailing platforms in the country, Indonesia’s GoTo and Singapore-based rival Grab. Critics of the deal say it will create a monopoly that will work against drivers.
The draft rules, seen by Reuters, details of the concessions, and potentially immediate enforcement via a presidential decree have not previously been reported. It was not clear if this was the final draft or when it would be enforced.
The decree under consideration would slash caps on commissions – the amount ride-hailing companies take from drivers for each trip – to 10 per cent from the current 20 per cent.
Indonesia is the only country in Southeast Asia that places caps on commissions for two-wheel ride-hailing services, and a cap would further limit the platforms’ margins.
Platforms would also have to pay for drivers’ accident and death insurance in full – which could cost companies about US$1 a month for each of the roughly seven million delivery drivers in the ride-hailing industry.
It would also split health, old-age and pension premiums for industry workers, potentially driving up hiring costs further.
“Most of the players in the industry cannot sustain these changes,” an industry source, who has seen the draft, told Reuters, expressing concern that the insurance fees would mean skyrocketing annual spending.
A second source, who also confirmed the proposals, warned that costs of premiums borne by platforms could lower margins and reduce the number of drivers they are able to allow on their platform.
Such benefits have for years been resisted by companies, which insist drivers are gig workers not eligible for the same insurance available to full-time employees.
The draft also authorises the government to review agreements between the companies and online transportation workers, and protects the right to unionise.
The Indonesian government and the presidential office did not respond to Reuters requests for comment.
Source: CNA
