What is a viable remuneration structure for taxi drivers – A salaried employee route

Oct 12, 13 What is a viable remuneration structure for taxi drivers – A salaried employee route

Posted by in Musings

Earlier on I was writing about the viability of salaried taxi drivers in Singapore, and it prompted quite a bit of discussion on my friend’s facebook. There were quite a number of comments, largely concerning whether taxi drivers will choose the salaried route vs the current, and that once you paid taxi drivers a fixed salary, they would become lazy. Ironically, when you think about it, both of these concerns are exactly the opposite. To me though, the devil is always in the details. Thus, I spent a bit of time thinking about it, and drafted a brief remuneration structure as follows below. The idea of course, is how do you pay a basic salary, yet with enough incentive for them to work hard. At the same time, we are trying to enhance the current taxi industry in Singapore, so certain aspects of that must be taken in consideration. To me, modelling a remuneration structure after similar systems in stock broking, banking sales, and other forms of salaried sales role might be an interesting starting point. You have a low basic salary, a quarterly performance bonus, and an annual quality bonus. Proportion There are many industries where there are salaried sales people, and self employed agents. Examples are stock broking (around 15% salaried, 85% self employed), insurance (probably closer to only 10% salaried) and property (also around 10-15% salaried). Thus, I would imagine the same can apply here. The existing remuneration system can be kept for those who chose the self employed route. Currently, they have to take a vocational license course, put a $1k security deposit, and pay a daily rental of around $70-120 for the taxi. They get to keep all earnings and they have access to cheaper fuel. As an employee, they would have to go through a typical interview and selection process. Whereas in the self employed model, almost anybody can become a taxi driver if they pay for their own license, course and deposit. Employees will also have the...

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Salaried taxi drivers in Singapore. Will it work?

Oct 10, 13 Salaried taxi drivers in Singapore. Will it work?

Posted by in Interesting articles, Musings

I was reading an article in the newspapers about “Raising surcharges won’t make cabbies drive longer”¬†and it set my mind thinking. The crux of the article is that raising surcharge will not make taxi drivers drive longer, simply because they may not be incentivised primarily by money. Taxi drivers in Singapore are typically self employed. That is, they rent a vehicle from the taxi company for a fixed cost. Then it’s up to them how hard working they want to be. Most of the time though, taxi drivers in Singapore tend to take a flexible approach to their work. If family matters come first, they will prioritise that. Currently, there are already surcharges implemented through various means. Location based surcharge to encourage taxi drivers to go to a certain region/location. Time based surcharge to encourage drivers to be more active during peak hiring hours. Even then, these are implemented in various mechanisms such as peak hour surcharge, midnight surcharge, etc. Often, when a taxi driver hits his profit target for the day, they will tend to take it easy. Maybe enjoy a coffee with some friends, or run personal errands with the taxi. In a personal/individual basis, it might make sense. But on a system basis, it degrades the reliability and service quality of the public transport system. Let’s not forget taxi is a form of public transport. The Land Transport Authority has recently mandated that 70% of a taxi fleet must cover 250km in a day. Even so, it is not likely to solve anything, but it adds more frustration into the system. 250km is simply 83km/h for 3 hours. I would imagine a typical active driver would cover more than that. But what it does is make ‘self employed’ people feel restricted on principle. So what next? A mandate of 500km? 750km? In the article, the writer suggested having drivers with fixed salary and bonuses for good performances. Pondering about it, it actually sounds like a good idea! Of course, the idea...

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