In recent days, the media heated up with the event that hundreds of Grab riders had turned off the application, gathered protesting parades in some major cities after Grab used the excuse of increasing VAT to increase the discount rate for drivers from about 28% to over 32%. Between Grab and the drivers has always been an indivisible love-hate relationship that cannot be regulated by any of the current laws. However, they must keep the relationship going on. The public puts pressure on Grab's Corporate Social Responsibility and their business model that should be explained with the presence & weight of how to to do good.
The relationship cannot be defined yet by any relevant laws - However, they must keep the relationship going on - Ha Dang, RespectVN Founder
One relation, three governing laws
This is not the first time riders have shut down the app and have focused on opposing Grab's policy changes. And Grab is not the only technology taxi firm that has a rider strike/demonstration problem. Other firms such as GO JEK, BE, UBER (previously) have all encountered this problem in the past few years, since the Decision 24 of the Ministry of Transport has expired. The Decision keens on piloting the application of science and technology in private transportation under the contract with many tax incentives for these technology taxi companies. The "honeymoon" phase between these firms and the government as well as riders is coming to an end. In essence, hundreds of riders gathered for a parade to oppose the Company to demand a fairer and more transparent discount mechanism. Basically, this isn't different from the regular events in which thousands of workers on strike demanding higher wages and reduced working hours, or social dialogue & better working conditions for many years.
However, the legitimacy is different. If Grab riders & Grab are compared as workers and businesses, their relationship is only regulated by the Labor Code Law
Riders and Grab Vietnam, unfortunately, seem to be governed by these three laws: Commercial Law 2005, Civil Code Law 2015, and Labor Code Law 2012/2019 - even if Grab is considered a transport business or a technology brokerage service provider.
Regarding Civil Code Law, Article 513 states that “A service contract is an agreement between the parties whereby the service provider shall perform a task for the service hirer, and the service hirer must pay service charges to the service provider".
Regarding the 2005 Commercial Law, Article 3.1 defines “Commercial activities mean activities for the purpose of generating profits, including sale and purchase of goods, provision of services, investment, commercial promotion, and other activities for the profit purpose”. But also in Article 2.5 of this law, all commercial activities are to be carried out by registered traders. This is a definition that makes Grab always assert that the operation of Grab riders is civil, and is "not profitable" so that the rider is not a "trader".
Also at this point, Grab riders can be included in the group of cases where "individuals doing commercial activities independently, often without business registration" such as "shoe shiners, lottery ticket vendors, car repairers, key repairers,… and other services with or without a fixed location" (Decree 39/2007/ND-CP).
As for the labor laws, if the 2012 Labor Code Law has not mentioned it, the version of 2019 provided the concept of "people working without industrial labor elations" has been included in the bill approved by the National Assembly. This is an attempt to expand the scope of protection for workers working in the state's informal employment sector, including technology riders/drivers.
However, even though the relationship between Grab & Grab riders is governed by these three laws, there are no laws that can be used to clearly protect Grab riders.
The biggest hope in the 2012 Labor Code is that this law only introduces the concept and after that, there is still yet no specific guidance on this object.
Specific actions, if any, are merely the Clause 3a, Article 34 of Decree 10/2020/ND-CP (effective from April 1, 2020) which stipulates: "The transportation businesses must sign labor contracts, pay insurance, organize periodical health checkups and fulfill their obligations to their workers (including drivers and staff serving on their automobiles) as prescribed by occupational laws”.
The beneficiaries of this law are only applicable for auto drivers working under the 'umbrella' of co-operatives and identified as a transport business, partners of the technology car companies such as Grab. Any individuals who own motorbikes and cars shall not belong to any transport business. Hence, they are not considered either "entrepreneurs" or "workers/employees" under the two laws of Commerce and Labor Law. Only there is civil relation, which means that the riders provide the service to the lessee, who is Grab, and receives the service fee from Grab.
Technology riders for many years have seen the advantages of the gig, which the most important is the fairness in the process of doing the job and being paid.
The downside of the gig economy
Although the relationship between the riders and Grab is yet to be named in the laws, the two partners still have to ... be in a relationship.
If we have followed Grab's activities since they entered the Vietnam market, we see that there has not been a day when neither party has stopped this relationship. That is how economic integration & development works.
From the beginning, in order to catch up with the new trend of the gig economy, the Government agreed to approve the pilot project 1850/TTg-KTN dated October 19, 2015, in which Grab and technology taxi firms can enjoy the tax rate at only 3% compared to traditional taxi is 10%. This advantage motivates Grab to expand strongly, from one to many different services on the same application. In a few years, hundreds of millions of vehicles have circulated on the road, hundreds of thousands of vehicles and jobs are created.
Some newspapers translate 'gig' which means temporary economy, I think that the incorrect translation method will make the reader misunderstand only one side. Picture 2 simplifies the comparison between two kinds of economies. If the formal economy consists of formal working and business relationships that are streamlined, less cumbersome with a bureaucratic culture, inherent bureaucratic mindset, massive overlap, lack of transparency in information, emotional management skills, political relations costs higher than the cost of human capital,... then this is the time when the concept of gig appears, remove the "chains" of barriers. This concept allows individuals, collectives, and the business community to freely develop, reduce the cost of "barriers" and increase the rate of investment in brainpower and unleash limitless human capacity.
All decisions about revenue and costs affect the brand, commercial value of a business.
Everyone also sees that and every day we see people to people who have been making the digital transformation, even Covid-19 makes every business think of digitization and participate more actively in the gig economy. Technology riders for many years have seen the advantages of the gig, which the most important is the fairness in the process of doing the job and being paid. Simply, the more you do, the higher income you get. No worries about relationships, high and low conflicts, the complex multidimensional corporate culture that never has the ability to change in the formal economy. The gig economy has made certain contributions to global development, the downside of which is because the parties do not respect the principles of the game. The "honeymoon" period up to now between millions of riders and technology taxi firms has shown that the downside of this economy is quite similar to the downside of the official economy. So that, technology taxi firms lead the 'superior' negotiation of cooperation agreements that riders regularly sign without reading carefully, including "giving" the right to tech-taxi firms can change the basic terms of the agreement without negotiation or notice. Discount rates, bonus rates, taxes, even how to operate the application to reward riders... are also belong to the absolute rights of tech-taxi firms. Up to a certain stage, gig or no gig is decided by the market, millions of riders as well as workers in other economic sectors continue to experience and make their own decisions. I still remember when talking to a woman grab rider, she said: "at least I have a choice, more than one option is still better".
Grab, instead of looking for ways to “cut down” small decisions like a few percent discount, collect taxes, etc., need to develop a team of brand associates and professional business strategy, as well as seriously looking back on branding, in view of the business model, in a society with a typical culture like Vietnam. So that, they can build the models which are unified with the goal of a vision of sustainability and "constantly better" as they declare.
Riders, like the millions of workers in the informal sector, still have the advantage of being able to express views like legitimate resignation and negotiating with tech-taxi firms in one way or another. Not only in Vietnam, riders in Thailand, Indonesia still regularly turn off apps and compel Grab on similar issues. It is important the way they do this action because a few hundred people have stopped working but thousands of people still need gig jobs. Once Grab has not seen the pressure of the lack of riders for their market share, which themselves have lost trillions to expand and acquire, they are still doing what they are doing. That is the reason that many opinions suggest that there should be organizations that represent the interests of technology riders for them to be better protected. However, the reality of such organizations in Vietnam still has many unanswered questions. The pressure on Grab and the tech-taxi firms could be greater as riders are determined to form organizations that truly "know how to negotiate with giants" and take advantage of international requirements for obligations that comply with international standards on labor rights of Vietnam when joining the recent major trade agreements (CPTPP, EVFTA, RCEP, etc.). Not even with the exception of the possibility that organizations fight for rider's rights all countries come together to find out the answer to how to deal with Grab, Gojek. etc. At that time, these firms will have to take more seriously the study of community culture in Vietnam.
What about Grab's corporate social responsibility?
While waiting for the completion of the law, the market determines the relationship between riders and technology taxi firms like Grab, what society expects is Grab's "social responsibility" for life, income, and jobs of millions of riders - their partners, besides the interests of consumers, for a better community.
These are very clear statements made by the Grab Representative in the 2018 trials about the lawsuit between Grab and traditional taxi companies, when asked why Grab lost trillions of money but continues to spread wide, develop, a low discount, high reward, etc. The lawsuit was agreed to postpone, but the answers of Grab leaders in Vietnam about how they will guarantee the employees are still parallel with big decisions related to partners and consumers, every time, they also get the attention of the public.
Corporate Social Responsibility (CSR) or Responsible Business (RBC) is increasingly a global trend, in which Vietnam is most evident in the obligations that Vietnam must fulfill when we desire to 'pick up sweet fruit' from free trade agreements with developed economies around the world.
Social responsibility, according to my own research over the past 10 years, has three levels. It is CSR in corporate policy, in business strategy, and highest level, in the business model of that company or corporation.
Grab has made public commitments with a global and regional policy on CSR. Anyone can download it online. Even in the business strategy as in the early stage in Vietnam, CSR has been more or less advertised through the statements of the leaders, the times of "burning money" trillions of billions to keep the competitive price for customers. , maintaining a high level of income for the rider partners. Those who do not believe in CSR only think that this is the strategy to expand market share to increase global trade value, call unicorn capital many times more successfully. Either way, in the past four years Grab has demonstrated its confusing "brain hacking" strategy to a large number of people with little knowledge of the global business.
However, from a business model perspective, the relationship between Grab's Cost, Revenue, and Value can simply explain Grab's decisions as well as its ability to make future decisions with a market like Vietnam.
Consider Value as the Global Brand that Grab or every business corporation must develop and maintain (including a huge part of today's business era is CSR). No matter how Revenue or Cost is shown on the business strategy, for example, taking a few years loss for product development and expanding market share (low revenue, low cost, low profit), every decision of Revenue and Cost are both affecting the Brand, Commercial Value.
In today's business era, every negative news in terms of society, people, communities like Grab Thailand "cruel" cut the income of riders standing at the top of the cargo shipping during the period of Covid social distance, or Grab Indonesia or Vietnam arbitrarily increases the discount to adjust the application and affects the rider's income, are all problems affecting the brand. If they don't handle it wisely, it can cause chain reactions on every business market share such as consumers boycotting, riders strike, quit jobs, especially when they receive organized leadership and guidance.
Finally, it can be the reaction of the whole society and the community, which can influence the investment decisions of investors with a vision and understanding of community strength. At that time, like many stories of branding failures and other CSRs, bosses like Bank of Japan who wanted to invest capital "indefinitely" for Grab would also have to think again.
"There are no great organizations.
There are only great people who make great organizations"
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Respect Vietnam prepares purpose-driven leaders
& people-centric organizations
in the face of the fast-changing world of work
