[stephenkhoo]

Wednesday, December 07, 2011
Taxi fare hikes and what is wrong with the system.....
Commuters are up in arms over the recent taxi fare hikes[Cabbies hope for higher takings, commuters see red]. This fare hike is supported by the National Taxi Association (NTA) that represents six driver associations. We have an inflation rate of 5% and taxi drivers like all of the rest of the wage earners in this country have mouths to feed and feel the pinch as much as anyone else. I'm not against the intent to improve the income of taxi drivers but raising fares is not the only way to improve the lives and working conditions of our taxi drivers. .The system within which our taxi drivers make a living is a microcosm of much that makes life difficult for many hard working wage earners.


There was a time when taxi drivers could really work for themselves being able to own the taxis they drive and keep much of the income for themselves. When Comfort was "NTUC Comfort", it operate the taxi service closer to that of a coorperative. Today, it is know as ComfotDelgro a listed company that has to answer to shareholders for its bottom line. Taxi drivers today can no longer own their own taxis and have to rent their taxis from a for-profit companies. Because taxis and the taxi licenses are limited in number the cost of a taxi together with a licence is among the highest if not the highest in the world. Taxi companies form an oligopoly since they cannot expand market share easily due to tight quotas on taxis and incenses. there is little incentive to set fares or rental competitively but merely follow the lead of ComfortDelgro.


Despite high rentals, long hours and "tough" work of being a taxi driver, there is no shortage of takers for these jobs because of our serious structural unemployment problem. In the past, taxi drivers had low education levels but today it is not uncommon to see degree holders and ex-professionals such as engineers driving taxis. We even have one driver with a PhD from Stanford who started a blog and gave us a glimpse of the trials and tribulations of surviving as a taxi driver in Singapore [Link].




"Twenty years ago, I could make $80 a day, and you could buy a lot more with that amount of money in those days" - Taxi driver, Henry Tan, in today's Straits Times.

The rising cost for the taxi driver in the form of rental and fuel and means that real income has not gone anywhere in the past 20 years as the fares for passengers increased over the same period. Much of the money goes to the profit of corporations (ComfortDelgro $228.5M profit in FY2010). govt revenue in the form of COE and licences. At the end of the day, much of what the passenger pays for goes to overheads and not the driver ....while we complain about taxi fares being too high, the taxi driver's life has not improved in the past 2 decades. What has happened to taxi drivers is a microcosm of what has happened in our economy as high costs push businesses to seek cheaper foreign labor to stay competitive and result in low or stagnant wages for Singaporeans.

I don't mind paying higher fares so that taxi drivers can live a better life but we know that the all past fare increases have been accompanied by rental and cost increases that take away the earnings of taxi drivers.

If you visit the National Museum, there is a video of a very young Lee Kuan Yew speaking to a large crowd at a rally in the 1960s. Half way through the speech, he pointed to a young boy in the audience and said "Look at this young boy, he needs an education ...otherwise he will grow up to be a taxi driver". Ironically, today we have highly educated taxi drivers forced to drive taxis due to structural unemployment as PMETs are pushed out of professional jobs by the large influx of foreigners.

There will be no progress for taxi drivers, workers and many Singaporeans unless the system changes significantly. Today, we have to compete with one hand tied behind our backs by the high cost of living and the high cost exacted by rent, overheads and the people and entities that contribute the least to our competitiveness.