The recently implemented fee hikes—ranging from S$0.20 to S$0.50 per trip across Grab, Gojek, ComfortDelGro, and Tada—stem from Singapore’s new Platform Workers Act, which mandates CPF contributions (starting at 3.5% in 2025 and rising to match traditional employer rates by 2029) and work injury compensation for gig workers. While these changes affect over 8,000 platform workers who have opted into higher CPF contributions since November 2024, the ripple effects on costs and competition are broader.
Impact on Demand and Consumer Behavior
Preliminary estimates from ride-hailing operators suggest that a 3–5% dip in monthly ridership could occur if consumers become more price-sensitive. For regular commuters (e.g., 30 rides per month), an additional S$0.50 per trip translates into roughly S$15 more in monthly expenses. While modest on a per-trip basis, it can accumulate for lower-income users who rely on ride-hailing as their main transport mode.Competitive Landscape and Potential Consolidation
The ride-hailing market in Singapore is already concentrated, with four major operators commanding over 90% of daily rides. New entrants may find it harder to absorb the cost of mandatory CPF and insurance provisions, risking an even more consolidated market. Larger platforms, with higher capital reserves and diversified revenue streams, can pass on these increased costs to consumers with less threat to their market share.Worker Welfare and Income Stability
Many gig workers welcome the new protections, as CPF contributions enhance retirement savings and insurance benefits reduce out-of-pocket medical costs. Over the long term, this added security could improve driver retention, meaning platforms may have a more stable driver pool. However, if ridership falls, drivers might see fewer trips per shift, reducing short-term income unless platforms adjust base fares or introduce incentives.Policy Considerations and Alternatives
- Partial Subsidies: The government could offer a temporary subsidy to platforms for CPF contributions, splitting the cost with operators and riders. This would lighten the immediate cost impact on consumers while still meeting policy goals.
- Phased Increases: Instead of raising fees all at once, a gradual fee schedule tied to specific CPF contribution milestones (e.g., 1% increments annually) could help riders adapt to price changes.
- Productivity and Tech Upgrades: Platforms can invest in route optimization algorithms or improved ride-pooling options to lower per-trip costs, offsetting some of the new fees for both drivers and passengers.
- Targeted Vouchers: For low-income riders, targeted transport credits could mitigate the higher daily costs and prevent reliance on less flexible travel alternatives.