After Gojek's merger, are Indonesian delivery riders getting a worse deal?

Hot on the heels of a multibillion-dollar merger between Indonesia's tech behemoths Gojek and Tokopedia is not the much-anticipated public listing by their parent, GoTo Group, but a strike from drivers of Gojek's same-day parcel delivery service.

Their three-day strike came after Gojek said it planned to dramatically slash incentives for GoSend Same Day, which promises instant delivery to e-commerce customers in the Greater Jakarta area and the city of Bandung in West Java.

Before, a driver could earn a bonus of 100,000 rupiah (US$7) for 15 deliveries, but that would drop to only 37,500 rupiah (US$2.65) in the new scheme.

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The drivers' representative, Yulianto Wibowo, told tech publication KrAsia that about 1,000 drivers claimed to have turned off their Gojek driver-partner app and refused to deliver orders from June 8 to 10.

The drivers also sent funeral flower bouquets to Gojek's office in south Jakarta to express their outrage.

According to a social media post, one of the bouquets said: "Your conscience is dead. Cutting our incentives during a pandemic."

Gojek, which is now part of the GoTo Group after it merged with Tokopedia last month, said the strike did not interfere with all of its services, including GoSend. 

Spokeswoman Audrey Petriny confirmed that Gojek had adjusted its incentive scheme "to provide greater opportunities for more driver partners to obtain incentives and earn additional income during this pandemic recovery period".

Under the new model, drivers do not have to meet a certain number of deliveries to get bonuses, unlike before. 

"The base income scheme and basic fare per kilometre for driver partners remain unchanged," she said. "GoSend also has various other programmes in place, including performance-based appreciation programmes."

Still, the drop in drivers' bonuses can reduce up to a quarter of their daily income, said Arif Novianto, junior researcher at the Institute of Governance and Public Affairs (IGPA) at Gadjah Mada University in Yogyakarta.

"Under the new incentives, drivers would lose 72,500 rupiah (US$5) in bonuses for delivering 15 parcels. For those, that amount is significant. Almost 98 per cent of Gojek's same-day delivery couriers rely solely on this gig for their livelihood," Arif told This Week in Asia.

"They still need to pay for motorcycle instalments, house rents, and other things. Almost 58 per cent of these couriers live in the Greater Jakarta area and they don't have their own houses because they are migrants from Central and West Java," he added.

Arif said the decline in bonuses happened even before the pandemic hit, and had come about as Gojek was approaching the end of the "honeymoon" period between on-demand platforms and their driver-partners.

During that phase, companies would not think twice to burn capital and provide bigger bonuses for their drivers in their quest to acquire more users.

According to an IGPA survey, in December 2019 drivers earned 360,489 rupiah (US$25.40) per day on average. Their daily income dropped in February 2020 to about 266,000 rupiah (US$18.75), and fell further to some 89,000 ($6.25) rupiah per day in April 2020 - around four times less than what it was in December.

The drivers' daily income has since never returned to 2019 levels, Arif said. 

According to Arif, following the Gojek-Tokopedia merger, customers on the e-commerce platform who were willing to pay more for quick deliveries would be enticed to use Gojek's same-day delivery service instead of GrabExpress, the same service offered by Singapore-based tech giant Grab, Gojek's arch-rival. 

"GoTo offers discounts for customers to use GoSend [to compete with GrabExpress]," Arif said. "As a result, drivers' bonuses were cut. Drivers objected to the decision as they deem it an arbitrary move."

Gojek and Tokopedia's merger last month was Indonesia's largest ever business deal as the resulting company, GoTo Group, will oversee a business that encompasses e-commerce, ride-hailing, delivery, and financial services.

The combined valuation of the two companies is US$18 billion. GoTo serves more than 100 million monthly active users, empowered by 2 million registered Gojek drivers fleet and over 11 million merchant partners in both companies.

Both companies saw massive growth last year, as more transactions were carried out online amid the pandemic. In August, Gojek said that the number of GoSend transactions had increased by 90 per cent since the pandemic started in March. The group's total gross transaction value was more than US$22 billion in 2020. 

Executives of both companies had reportedly discussed plans to go public in Jakarta, and were also exploring the possibility to go public in the US via a special purpose acquisition company (SPAC), following the step taken by its rival Grab.

GoTo also reportedly sought a similar valuation to that of Grab's after its SPAC listing of about US$39.6 billion. Among GoTo top investors are Google, Facebook, PayPal, Tencent, Softbank, and Alibaba Group Holding, the owner of the South China Morning Post. 

An estimate by Kontan, Indonesia's prominent daily business newspaper, this week showed that stakes belonging to the co-founders of Gojek and Tokopedia, Nadiem Makarim and William Tanuwijaya, have now ballooned up in value to more than US$297 million and US$329 million, respectively. 

Driver-partners at Gojek were initially "hopeful" that some of those large capitals would trickle down to them, said Igun Wicaksono, chairman at Garda, a 6,000-member association of drivers for online ride-hailing and on-demand platforms.

"They had a big hope that the welfare of driver-partners would increase as these two big platforms earned more capital from the merger," Igun said. 

"But after the companies became GoTo, the drivers didn't get what they expected. This protest is their way to show their disappointment towards Gojek, because the reality doesn't meet their expectations." 

Gojek spokeswoman Audrey said the company would "continue to work with our driver partners to build customer loyalty and ensure ongoing, sustainable growth for all".

Arif pointed out that this latest kerfuffle with Gojek couriers was part of the bigger problem in the dynamics between big tech platforms and gig economy workers in Indonesia, as their position remained unequal despite the workers' classification as partners, not employees. 

A study carried out by IGPA last year found that 63 per cent of respondents, who were gig economy workers in online ride-hailing and delivery platforms, preferred not to be classified as full-time employees as they liked the "independence and flexible working hours". 

But their partnerships with the tech platforms are yet to align with the principles set out by Indonesia's 2008 law on partnerships between stakeholders in the micro, small, and medium enterprises, Arif said. 

"According to the law, there should be a discussion between partners about any decisions that could affect the business. In reality, this doesn't happen. The relationship between gig economy workers and the platforms in Indonesia now are more like labourers and employers," he said. 

"If the government doesn't regulate this problem soon, many gig workers in Indonesia will live indecent lives, which eventually would affect the lives of the next generations."

This article originally appeared on the South China Morning Post (SCMP).

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