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The Big Story

Unicorns return as pandemic pushes Indonesia online

E-commerce industry gains don't trickle down to its vulnerable employees

A Grab driver delivers food in Jakarta. (Photo by Dimas Ardian)

JAKARTA -- 2020 was a boom year for Indonesian e-commerce companies. Despite a pandemic-induced recession, where economic growth was projected to contract by 2.2% by the World Bank, e-commerce transactions over the same year are expected to have jumped by 52% to $32 billion according to the most recent e-Conomy SEA 2020 survey.

The e-commerce and delivery industry has been showered with finance, one of the few profitable plays remaining against a backdrop of economic carnage.

A big winner has been Gojek, Indonesia's homegrown superapp, which began as a ride-hailing app for motorbike taxis but quickly branched out into food delivery and financial services. It celebrated its 10th anniversary in November and now operates in more than 200 cities and towns in five countries in Southeast Asia, with Indonesia remaining its largest base. The company says it has 2 million driver-partners.

Despite the pandemic and mobility restrictions, Gojek in November said it has "seen stable top-line growth throughout its business" with over $12 billion in annualized gross transaction value -- a 10% increase from the year before. The same month, it bagged a $150 million investment from Indonesia's largest mobile operator, Telkomsel. That was on top of a  $3 billion funding round which started in 2018 and closed in June, and was joined by U.S. tech giants Facebook and PayPal Holdings.

Companies like Gojek depend on a ready pool of relatively low-paid delivery drivers like Komaruddin, a 28-year-old who said he had been making about 200,000 rupiah ($14) per day when he joined Gojek as a motorbike taxi driver in early 2018.

Before the pandemic, he worked 12 hours a day, cruising the streets for customers, and used to take one day off every week.

Then the coronavirus struck, and his work hours expanded. In recent months, he has been working 16 hours a day and taking just one day off every two weeks -- and yet he still only brings home half, or even less, of what he used to earn. Much of his time is spent idling, waiting for orders to come in on his Gojek smartphone app.

"My two kids have been complaining because they rarely see me these days," Komaruddin told Nikkei Asia in late November. "I would try to find another job if I could. But it's tough."

Drivers' pay has deteriorated partly because the lucrative business of carrying passengers has dried up, while food deliveries, which have leaped, are time-consuming and low-paid. Once, he waited an hour at an apartment lobby at midnight because the customer fell asleep, Komaruddin recounts. "But I guess for now, due to COVID, it's safer than taking passengers for a ride," he adds.

In the style of ride-hailers like Uber, Gojek calls those like Komaruddin "driver-partners" rather than formal employees, and has encouraged the drivers to register with the government's worker protection program, BPJS Ketenagarkerjaan, which covers accident and life insurance.

Despite the higher demand, couriers from many companies report they are being paid less. Couriers interviewed from six different companies mostly spoke of longer working hours and lower pay per delivery during the pandemic -- including two Gojek drivers, couriers from parcel delivery companies Anteraja and SiCepat, and a part-timer at Shopee Xpress. A courier from JNE Express said his workload and pay have been the same before and during the pandemic. In contrast, one Lazada Express courier said he has been delivering fewer parcels for the same monthly salary, meaning a higher pay per parcel.

Gojek used to give a daily bonus to drivers who met their daily delivery quota. Now the bonus scheme has been suspended, meaning that pay per delivery has fallen -- an average 20% drop to approximately 4,000 rupiah net per delivery for drivers in Jakarta and satellite cities, estimates Igun Wicaksono, chairman of the Two-Wheeled Action Association, or Garda, an organization whose members account for 100,000 Gojek and Grab drivers nationwide.

Wicaksono added that the association does not keep official figures, but there have been various reports of drivers infected by the coronavirus and becoming involved in work-related accidents.

"It's because orders are getting tougher to find," he said. "The efforts that we do and the energy we spend to get orders are bigger, resulting in poor focus while driving, which has led to more accidents."

Gojek last year said it raised over 100 billion rupiah ($7.1 million) in a support fund for its drivers-partners, "with significant contributions from Gojek leadership, employees and corporate partners." The company said the fund was used to distribute millions of meal vouchers and hundreds of thousands of staple food packages to drivers and their families, among other things. 

In many ways delivery drivers are the lucky ones, however, says Dwi Topan, 25, a courier at SiCepat. The company is a partner to multiple e-commerce platforms with major operations in Indonesia -- including local unicorns Tokopedia and Bukalapak, as well as Shopee of Singapore's Sea Limited, which is listed on the New York Stock Exchange.

He says his parcel volume per day has jumped from 140 units to 180 during the COVID-19 era -- but, accordingly, so have his bonuses. Part of the reason is that, unlike non-employee drivers in ride-hailing services like Gojek and Grab, Topan said he is a full-time permanent employee at the delivery company, a status that brings life and health insurance along with a holiday allowance.

"Of course I'm tired," he said, "But I'm grateful, and I'm happy having to deliver many packages -- it means more bonus. And it's no use complaining, especially when people around you were sacked from their jobs."

Heru Sutadi, executive director of Jakarta-based digital economy think tank ICT Institute, pointed out that around 2015, in the early days of online taxi operations in Indonesia, drivers had been able to easily earn more than Jakarta's minimum regional wage -- around 3 million rupiah a month at that time. That had attracted many people to do the job, and now there are an estimated 4 million online drivers in Indonesia working for Gojek and its Singapore-based rival, Grab. The drivers are competing more for less income -- and the pandemic has exacerbated their plight.

"The pandemic is indeed affecting all sectors, including incomes of online taxi drivers," Sutadi said. "But these platforms have bagged a lot of investments from various sources -- they should be paying more attention to the drivers' welfare. After all, they're the ones who've been helping the unicorns flourish."

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