Price increase: pure and simple ban “counter-productive”, difficult to set a ceiling, according to experts

NOT JUST DOLLARS AND CENTS

When it comes to frustration over power surges, the problem boils down to society wanting the point-to-point industry, and taxi and ride-hailing drivers, to operate as if they were “a social and public service whose objective is to offer a good offer of rides at a reasonable price,” said Professor Assoc Theseira.

At the same time, people “want the industry to absorb all market risk”. But you can’t have both at the same time, he added.

“To expect (an increase in supply without a spike in prices) would be to expect potential taxi and ride-hailing drivers to want to offer cheap and reliable rides when there may be jobs available elsewhere. Taxi and ride-hailing is not a charitable activity and people do not volunteer to do these jobs. Prices must therefore be high enough to produce an increase in revenue which will then encourage more drivers to do this work.

Dealing with soaring prices is about valuing the work of drivers, added Professor Assoc Theseira.

“If Singaporeans believe – as I think they naturally do – that they would work harder at a job or apply for a job if the wages were more attractive, and would be less likely to do a job if the wages were low , so why do they expect taxi drivers and VTC drivers to behave any differently than themselves?” he said.

“There is also a certain circularity in how we value work socially and what we pay for work. ‘inherent in work.’

Prof Assoc Theseira doesn’t think people will ‘suddenly respect private taxi and hire drivers overnight if fares go up’. Instead, the “most practical thing” to get people to respect these professions is to “leave market wages for jobs that provide us with important services like taxis and VTCs do to reflect the importance we place on safe and reliable journeys,” he said.

“If you want an industry to operate as a social and public service, for example, as our hospitals and public transport services do, you must also commit to helping reduce risk to the industry. … (So) in public transport, we subsidize operators when fare revenue is too low to cover costs.”

These subsidies have taken the form of income and rent assistance, for example, in the last two years of the pandemic.

But with the economy reopening, Grab is making sure its drivers continue to “earn a sustainable income” by keeping a close eye on the “macro environment”.

“For example, when fluctuations in fuel prices increased our partners’ operating costs, we implemented a series of initiatives, including temporary driver fees, fuel discounts and vehicle discounts. commissions to support them,” the company said.

He added that flexible work opportunities are provided to “a diverse group of driver-partners…to access fair income opportunities.”

“In addition to our regular carrier services, we have continuously invested in and launched services such as GrabAssist, GrabFamily and GrabPet. These services help our partners earn higher fees for their time and effort, while allowing them to remain relevant to growing new consumer segments,” the Grab spokesperson said.

“We have also worked with partner merchants to develop and promote a wide range of delivery services that enable our partner drivers to also benefit from the rapid growth of e-commerce.

SURGED PRICES “ARE LIKELY TO CONTINUE”

For now, Dr Ong thinks the price spike is “likely to continue”, in part because it provides more incentive for drivers to earn a living.

“If, say, the price hike isn’t going to continue, then what’s going to happen next? Then it’s going to be a purely regulated industry… Then you’re going back to the pre-ride era of sharing, where you start seeing people (unable to) find taxis for a certain period of time or in certain places because it’s not profitable,” he said.

“We have to think about this problem of rising prices also from the driver’s point of view. They also have a problem of supply and demand; they also have to make a living. places where to pick up customers?… That would lead to a drop in the overall level of service throughout this VTC and taxi industry.

Ultimately, resolving the “supply situation” may simply require prices and surge revenues to be “robust enough” that “new drivers are incentivized to take point-to-point driving and existing drivers extend their hours of operation or take part-driving time,” said Professor Assoc Theseira.

The same principle applies to vehicle availability, he added.

“Taxi operators and operators of private rental vehicle fleets increase the supply of vehicles when there is a high demand for rental, and this demand is directly driven by the fact that potential drivers believe it is worth the hard to drive.”

But a longer-term approach to more sustainable living, Dr Ong suggested, is to see public transport like buses and the MRT as a “viable competitor” to taxi and private hire car services.

“From my origin to my destination, there are competing choices. It’s not just taxis and private rental cars. There’s also the bus and the MRT. Or if the place is really, really nearby, there’s also walking and cycling, so I’ll tend to look at that as a whole ecosystem of a journey; where I’m going and why I’m doing certain things,” he said.

“And that’s where I think the livability aspect comes in, because livability has to support a multitude of options that consumers would logically choose.”

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