At the height of the COVID-19 pandemic, 26-year-old Piti started working as a Grab delivery driver and had little trouble making a respectable living.
Piti has been carrying meals to homes and businesses for two years, but his earnings have fallen so drastically that he is considering switching employment.
Piti claims that for the past few months, he has been paid a starting rate of 38 baht ($1.07) instead of the previous 40 baht ($1.12) each food order.
Even worse, according to Piti, he accepts significantly fewer jobs as a result of a substantial increase in the number of drivers on the road.
“I used to earn about 2,000 baht [$57] per day, but now some days I earn just 900 baht [$25],” Piti, who chose to go by a pseudonym to prevent punishment, told Al Jazeera.
Piti intends to switch to using Grab’s ride-hailing service to transport customers since, in his opinion, it offers a more lucrative rate of 35 baht ($0.98) per kilometer.
In Thailand, one of the most competitive marketplaces in Southeast Asia for “super apps” like Grab, food delivery drivers are facing a decline in their pay as platforms make cost cuts in the face of challenging economic conditions.
Following a record-breaking $39.6 billion merger with a business that wrote blank checks, Grab Holdings went public in New York in 2021, controlling over 44% of the Thai market.
Although the Singapore-based start-up is considered Southeast Asia’s most expensive tech unicorn, it has failed to control its losses and has yet to make a profit.
Since 2020, when the company slashed 360 workers, Grab has cut more than 1,000 jobs, most recently in June.
CEO Anthony Tan called the layoffs a “painful but necessary step” to maintain the company’s competitiveness moving forward.
Similar problems have plagued other food delivery services.
According to analytics company Creden Data, Line Man, a delivery app created by the Thai division of Japan’s Line Corp., posted a loss of 2.7 billion baht ($75.9 million) last year, down 14% from 2021, despite increasing sales by 88 percent to 7.8 billion baht ($219 million).
According to an estimate by the Bangkok-based Kasikorn Research Center, the market value of Thailand’s food delivery industry will reduce by 11.3% this year compared to 2022 as a result of a drop in food orders following the epidemic.
Drivers of food deliveries for several platforms who spoke with Al Jazeera claimed that they had not been given an explanation for the decrease in their pay.
Driver Pon claimed that his base salary per order had been decreased from 43 baht ($1.21) to 39 baht ($1.10). Pon works as a driver for numerous platforms, including Robinhood.
“I have spoken to friends on many platforms, and we have faced the same situation,” said Pon, who wanted not to be identified by his real name, to Al Jazeera.
Pon switches between apps frequently, occasionally even moving platforms on the same day, like many other drivers.
Drivers are compensated every delivery order and gain more money for traveling farther on platforms like Grab, Foodpanda, Robinhood, and Line Man Wongnai.
In other instances, drivers are given incentives to help them reach the income goals.
Since there is no fixed wage, a driver’s income increases with the number of hours worked.
“Rates are high during 11am-2pm and 5pm-7pm and especially when it’s raining because that’s when orders are at their highest,” Natee, a 39-year-old Foodpanda driver who requested to use a pseudonym, told Al Jazeera.
Natee’s rates on Foodpanda have decreased along with those of other drivers. Natee left his manufacturing job because his boss did not compensate him for overtime.
He earns extra money by driving people around on Bolt, a ride-hailing app that debuted in Thailand in 2020.
Hilman Palaon, a digital economy specialist at the Indo-Pacific Development Centre of the Lowy Institute in Australia, told Al Jazeera that “many drivers have diversified their income streams by simultaneously working for multiple ride-hailing platforms.”
According to the current demand and pricing circumstances, they are able to transition between platforms thanks to this comprehensive interaction.
James Guild, an adjunct fellow at Singapore’s S Rajaratnam School of International Studies (RSIS), said it was expected that platforms would distribute drivers’ earnings less evenly than they did in the beginning.
According to Guild, who spoke to Al Jazeera, “now their priority is profitability, so we should expect drivers, merchants, and consumers to see less generous incentive schemes, revenue splits, and higher fees.”
“Grab has been incredibly unprofitable, so it needs to make some changes to its business strategy. The issue is who and where will pay for these improvements.
Drivers’ charges typically change as a result of consumer requests in each location, the local economy, the level of competition, and the weather, according to Line Man Wongnai, which debuted in 2020 as the popular messaging app Line’s delivery division in Thailand.
Vice President of Public Affairs for Line Man Wongnai Isriya Paireepairit told Al Jazeera that “our latest adjustment in March did both rise and drop in different areas.”
“We increased the compensation in the central Bangkok region where the demand is very high.”
Regarding the compensation drop, Grab Thailand refuses to comment.
Grab Thailand’s managing director, Worachat Luxkanalode, claimed in June that the platform saw growth once the nation reopened following the pandemic.
He claimed that despite remote work’s contribution to the continued strength of food delivery orders, the platform was aiming to increase value per order by collaborating with more eateries and launching more user-friendly discounts.
Luxkanalode acknowledged that the business idea for the meal delivery service was not successful.
“[For example], Grab receives a 20 baht ($0.56) commission from the restaurant for every 100 baht ($2.81] order and pays the driver 40 baht, so we immediately lose 20 baht,” he said.
Platforms have been attempting to diversify their sources of income because to problems with profitability.
By integrating with services like Line Chat, Line Pay, and Line Shopping, Line Man Wongnai hopes to take advantage of the 50 million users of Line.
At a gathering in July of last year, Grab’s Luxkanalode announced that the platform intended to provide more financial services, including low-interest loans for its drivers and food sellers.
Grab Thailand already provides services like hotel booking, digital wallets, and tailored grocery or laundry delivery.
However, as businesses shift from expansion to profits, “we are entering an interesting transition period,” RSIS’ Guild added.
Turns out ride-hailing and delivery are difficult to monetize, so these apps are attempting to convert their sizable customer bases into financial services clients, who are typically a more lucrative market.
After a bright beginning, the gig economy’s future, according to Guild, remains unknown.
By lowering transaction costs and more effectively connecting buyers and sellers, he said that it had good effects.
It has aided small enterprises in breaking into previously inaccessible markets. A few years ago, drivers in Indonesia who put in the necessary time earned significantly more than the minimal salary. Because the objective was to onboard additional drivers at the time, they were given particularly alluring incentives. Those times appear to be in the past.
THE SOURCE IS AL JAZEERA
