MySay: Grab, Uber and the economy

This article first appeared in Forum, The Edge Malaysia Weekly, on February 12, 2018 - February 18, 2018.

Young drivers, surprisingly, are not involved in the e-hailing business solely for money

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Cab drivers are among the best people who can tell us about the state of the economy in any country. They can provide a good glimpse of people’s purchasing power by the number of rides they have with their passengers every day. They also have the habit of retelling stories that their passengers — who come from numerous industries — share with them.

From these stories, we can get a rough idea of industry performance levels and prospects. More often than not, drivers also share their own take on certain political economy issues and convey their ideas on which policies should or should not have been implemented by certain authorities.

Prior to the emergence of the new breed of drivers — those who provide e-hailing services such as Grab and Uber — we would normally hear economic stories that relate to certain age groups (mostly the elderly). This is simply because taxi-driving back then was dominated by older people.

For instance, my conversations with Singaporean cab drivers a few years back tended to centre on the issue of medical costs in that country, with the elderly finding it difficult to cope with expensive medical treatments and medications. According to many of them, they had to resort to travelling to Malaysia frequently to get cheaper private medical treatments. Of course, Singapore’s relatively strong exchange rate helped too. Many opined that more government spending was needed to assist the elderly in coping with high medical costs. That was what Singapore’s “fiscal surplus” should be used for, they argued.

Now, enter the new breed of e-hailing drivers. In Malaysia, they are drivers of Grab and Uber. By talking to them, we can sense that economic issues are their usual topics of conversation — particularly the high cost of living and housing. However, somewhat missing from the picture are political economy issues (I use the word “somewhat” because a small group of them still enjoy talking about politics).

Young drivers, in general, tend to focus on what they need to do to enhance their living standards; politics, thus, may not be their favourite subject. Surprisingly, they are not involved in the e-hailing business solely for money. There are other reasons, which I think is related to the changing structure of employment and the way the new generation looks at opportunities.

As I had expected, their primary reason for becoming e-hailing drivers is to find a means of supporting themselves after being asked to leave their full-time jobs. Many of them were retrenched because their firms were not doing well due to reasons such as stiff competition, high debt and cash flow problems. So, in that sense, taking on e-hailing work allows them to have some financial breathing space.

Most drivers continue to consider themselves as “working”, though they do not put in as many hours as they did in their full-time jobs. Thus, in a labour department survey, they would be considered “employed” and a part of the labour force, although they are actually working part-time while waiting for full-time employment.

Such a scenario actually provides a different perspective when we examine labour market statistics. While these young drivers are categorised as “employed”, they could well be “underemployed” (a term economists commonly use to describe those who are working in lower-paid jobs or working fewer hours than they would like to work).

In other words, they are trained for higher-skilled tasks but are in lower-grade jobs due to skills mismatch or a lack of appropriate opportunities. The implication of this is that the unemployment rate reported by the Department of Statistics may be overestimating the actual strength of the labour market.

However, there are contradictory arguments. This is because there are other equally important reasons these drivers have chosen to take up e-hailing work. Not all have lost their full-time jobs. In fact, some do it to make more money while maintaining their full-time jobs. This is understandable as the rising cost of living calls for more income to sustain monthly family expenditures. E-hailing drivers consider this driving job the easiest way to add to their coffers without having to be attached to another workplace.

Even for those who drive on a full-time basis, not all do it because of a lack of full-time job opportunities. Some prefer driving full-time for Grab or Uber to taking on nine-to-five office work as the inherent flexibility of the former allows them to attend to daily tasks, such as transporting their children to school and taking care of other family matters. From a cost-benefit perspective, this makes sense as the amount that people need to fork out for school transport and day-care services never stop rising. Indeed, the new breed of workers, namely the younger generation, prioritises flexibility in working hours when choosing their jobs.

Recent conversations I have had with some drivers also suggest that they find driving a great opportunity to enhance their business network. Part-time drivers who run their own businesses would make it a point to introduce their businesses to passengers whenever the opportunity arises. They even distribute their business cards to passengers who are willing to listen to them talk about their main businesses. Certainly, these young drivers understand the importance of business networking in today’s globalised world. In fact, they believe business networking could be more valuable than their education.

So, while some may argue that the increasing number of e-hailing drivers means that labour market conditions are deteriorating (more retrenched workers and underemployed people), it also represents the changing structure of the labour market. In particular, the younger generation places greater priority on the flexible nature of jobs in order to afford the cost of living as well as expand their business network.

They also tend to appreciate leisure more than the older generations. But of course, driving for e-hailing services can certainly also help those who are in between jobs to make ends meet.


Nor Zahidi Alias is chief economist at Malaysian Rating Corp Bhd. The views expressed here are his own.

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