An Uber/Grab driver wrote to former Presidential candidate and NTUC Insurance CEO Tan Kin Lian in the hope that his plight can be highlighted to Singaporeans so as to raise awareness of his situation.
He told Mr Tan that he was forced to drive Uber/Grab due to prolonged unemployment.
"Driving Uber/Grab driver is not what we would choose as a first choice. It is a last resort after prolonged unemployment," he said.
He disclosed that after driving more than 9 hours a day on average, an Uber/Grab driver typically will get about $1,800 a week in fares and incentives. But the rental and petrol will take away about $750. So, that means the net pay a month is about $4,000 for Uber/Grab drivers.
However, one has to note that the working hours are long and the driver has to work 7 days a week, with no allowance, medical benefits, insurance, AWS, bonus and CPF.
"To feed a family on such a budget is difficult and already there are more than 41,000 of such PHV drivers in a small island like Singapore," he added.
"What I want to highlight is how the Govt under PAP has been making things even harder for these ex-PMETs who are already sad enough after getting retrenched!"
Then there is income tax.
He explained, "For income tax calculation, rental and fuel are not deductible expense, therefore we need to pay income tax based on a $92k gross earnings salary. This means a tax bill of $4k a year (8% of income!!) and there are also medisave contributions to make!! If you are aged between 35 to 45, the rate is 10% wif a cap of $7200 (15% of income)!"
"Imagine paying almost $12k to tax and medisave when you are only earning 48k a year! So in total, this is 25% of our income."
That is to say, after including income tax and medisave, the Uber/Grab driver will only get net net of $36,000 or about $3,000 a month.
"The stress levels and the cost of living in Singapore is getting worse," he complained.
"Good luck to you if you are retrenched and you think that you have some refuge by driving GRAB, now you are also squeezed left right centre by the G!"
Expenses for business non-tax deductible
According to GRAB's website, it is stated clearly that Petrol costs, Car rental, Rental deposit, Maintenance costs (if applicable), Car accessories (e.g. handphone holder), LTA fees (e.g. car conversion -costs), ERP, Parking / parking fines / road tax, insurance, medical checkups expenses and GrabCar drivers’ car operating expenses are all non-tax deductible.
Uber/Grab business model "not sustainable"
Until now, big players like Uber and Grab have been willing to pay a very high price for customer acquisition, which delays their path to profitability. They are heavily subsidizing both customers and drivers to gain market share.
Beijia Ma, a London-based strategist for Bank of America Merrill Lynch, told The Edge Singapore last year, "When you have VC firms funding you for years, you initially see more value destruction than value creation, unlike in the public listed space, where shareholders need to see profits every quarter and if you can’t perform, your stock gets punished."
"So far, the VCs have been happy to throw more money at ride-hailing firms because they believe the platform will lead to a huge payoff eventually, but we are reaching a stage where the most generous backers — even those with fairly long-term horizons — would start demanding some traction towards profitability," Ma added.
Another person who thinks the business model of these ride-hailing companies is not sustainable is Prof Aswath Damodaran who teaches equity valuation at New York University.
Prof Aswath said, "The ride-hailing business, as it is currently structured, is not sustainable."
"What Uber and other ride-hailing companies have found is that it is easy to grow the business, but actually very difficult to make money,” he noted. "What allowed Uber to grow as fast as it did was its creation of a low cost-of-entry business."
So, if what these analysts said is true, it would spell disaster again for our retrenched PMETs who are now making a living by driving Uber/Grab.
If Uber/Grab collapsed or decided to cut back on incentives and subsidies, our retrenched PMETs driving Uber/Grab may have to find new ways to make a living again.