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Editorial Safety Nets

The P-Hailing License: A Case Of Over-Regulation?

The government plans to implement a p-hailing license to regulate parcel delivery riders. We ponder the rationale behind it and what it would achieve.

By Edwin Goh & Nelleita Omar13 January 2021


Baca Versi BM

The number of road accidents and traffic violations involving delivery riders has become a matter of some concern amongst government agencies and the public, fueled by the growth of delivery services in these MCO times.

Perhaps in response, in August 2020 the Ministry of Transport (MOT) announced plans to introduce a parcel-hailing or p-hailing license, with the stated aims of ensuring road safety as well as providing a conducive environment for the p-hailing industry.

Given the prevalence of motorcycle accidents in Malaysia, we ask: how would the introduction of this new license drive down the accident rate and improve road safety? And apart from road safety considerations, what are sufficient conditions to introduce an occupational or service provision license? Finally, how might such licenses affect the burgeoning pool of delivery riders trying to make a living today?

The road safety issue

According to Malaysia’s Deputy Transport Minister, 64% of road accident fatalities in 2019 involved motorcyclists. A more recent and targeted traffic monitoring study of 11 main roads in Kuala Lumpur by MIROS discovered that p-hailing riders comprised about 64% (similar statistics coincidental) of motorcyclist traffic violations. These figures provide evidence, to some extent, of the impact of p-hailing riders on road safety.

But how might a p-hailing license change p-hailing rider behaviour on the roads? The MOT has yet to release full details, but the Deputy Transport Minister has so far disclosed that the impending p-hailing license would require parcel delivery riders to pass a health screening and possess personal accident insurance coverage. If the e-hailing license introduced in 2018 is any indication, the p-hailing license may also require delivery riders to be a Malaysian citizen or permanent resident, be 21 years old and above, have the right class of motorbike driving licence and not have a criminal record. The delivery rider may also have to pass a medical check, vehicle inspection and licensing exam.

Apart from ensuring vehicle road-worthiness, it is unclear how the above conditions, if implemented, would change delivery riders’ road behaviour and address road safety concerns. Exams and awareness videos are all well and good, but there is little to suggest that these are effective means of improving compliance to traffic rules. If that were the case, then all motorcyclists, whether p-hailing riders or no, should be subject to the safety requirements of a p-hailing license in the name of road safety and accident reduction.

Regulations should address the root causes or factors that shape the road behaviours of p-hailing riders. One of the reasons that delivery riders engage in dangerous driving behaviours is the inherent incentive structure of gig work – faster deliveries mean more gigs per hour of work, which means more income. Positive customer ratings as well as the gig platform’s reward algorithm for completed gigs also incentivise the delivery rider to take more chances on the road.

If improving road safety amongst delivery riders is the core objective, it would be better served by corralling major gig platforms into devising measures to detect dangerous driving, such as in-app speedometers, and to integrate traffic rule compliance into their reward policies and algorithms. Apart from these are the more general road safety measures which should apply to all motorists such as increasing traffic cameras, enforcement of the demerits system, more motorcycle lanes, among others.

The license rationale issue

Conventionally, an occupational license is a regulatory tool used to protect consumers from incompetent or unscrupulous service providers. These are typically imposed on occupations that can present significant risk and cost to the consumers such as health professionals, architects, lawyers and so on.

By introducing a license to a profession or occupation, government authorities may set entrance requirements and industry standards as well as undertake disciplinary actions against any occupational malpractice. In this regard, it makes sense to license e-hailing and taxi drivers, all of whom have the consumer’s safety in their hands every time a passenger steps into their vehicle.

However, do p-hailing delivery riders have consumer safety repercussions as per e-hailing drivers? Food order mix-ups are certainly aggravating, but the parcel delivery service for a consumer is hardly life-threatening. Even against cases of outright parcel theft, the incentive structure in-built into gig platforms would quickly weed out such occurrences amongst delivery riders. The question remains then, in what way would a p-hailing license on delivery riders protect the consumers?

Potential unintended consequences

In view of the above arguments, introducing a p-hailing license on delivery riders (as opposed to a service provision license on gig platforms) could be a case of over-regulation. There is also the issue of unintended consequences.

Firstly, if the p-hailing license carries the same age requirement as the e-hailing license, this would prohibit those below 21 years old from performing parcel delivery gigs. Our industry sources indicate that a sizable proportion of gig delivery riders, around 40-60% of the total force, would not make this age cut. Given the typical demographics of this group – no tertiary qualifications, low-income households – that’s a sobering thought.

Secondly, what would a p-hailing license mean for freelancers unattached to any gig platform? The majority of delivery riders who work with gig platforms would most likely comply with p-hailing regulations as most gig platforms would want to ensure and support compliance. Non-platform delivery riders will likely have to shoulder the burden of licensing on their own, or perhaps more likely, choose to become unlicensed and thus ‘illegal’.

Furthermore, these non-platform delivery riders typically serve very small businesses. As a result of licensing, these small businesses may be forced to use gig platforms for their delivery needs, reducing their business margins further, perhaps up to 25-30% of their revenue. For a small business, it could mean the difference between staying open or closing shop.

Thirdly and finally, the introduction of a p-hailing license could also affect those of age who look to delivery gigs as a source of side income. Our gig worker study last year highlighted the significant proportion of gig workers, including delivery riders, who want to perform gigs on a part-time basis for the foreseeable future. Judging from the experience of the e-hailing license, introducing p-hailing licensing could shut the door on part-timers due to the added barriers of entry in the licensing fee, the language of examination, amongst others.

Conclusion

The rapid growth of any occupational class or industry should be accompanied by regulations and enforcement to mitigate any risks or public costs associated with the emerging services. However, there is no one size fits all solution to the booming gig industry, which includes parcel delivery. Imposing a regulatory framework meant to address risks in one type of gig occupation may not necessarily work for another. It is crucial to tailor licensing requirements and other regulations to the specific risks presented by the occupation or service, else it may produce costly unintended outcomes to the worker, the consumer, and the industry.

Email us your views or suggestions at editorial@centre.my


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