Is it still worth being an Uber driver in Singapore in 2016?

My Facebook news feed has recently been in an uproar about Hollywood's whitewashing of traditionally East Asian characters. First, it was Tilda Swinton as The Ancient One from Marvel's upcoming movie Doctor Strange.

Then we had the first look at Scarlett Johansson as Major Motoko Kusanagi in next year's live-action adaption of the manga classic Ghost in the Shell. Either news story would've been pretty controversial on its own, but to have them hit us back to back has really driven home the point.

Wait, what has whitewashing in Hollywood got to do with driving with Uber?

Uber drivers have been going through an uproar of their own recently, as a result of two announcements that came back to back last week. It was earlier announced in Parliament that Uber and Grab drivers would soon have to undergo safety training, medical and background checks as part of a new Private Hire Car Driver Vocational Licencing (PDVL) framework.

In fairness, the new regulations aren't really that much stricter compared to the existing requirements that Uber has already implemented for their drivers. The main difference? Uber previously required drivers to have a valid driving license that is a year old. The new regulations require a two-year old driving license at least. Drivers would also need to attend a 10-hour PDVL course (and yes, there will be exams). All this is expected to be implemented by early next year.

Hmmm… that doesn't sound too bad for Uber drivers…

There's more. Barely a day after the PDVL was mentioned in Parliament, Uber then announced that there would be a 15 per cent fare reduction for uberX rides starting this past Thursday. Essentially, while that means that uberX riders will be rejoicing, drivers can expect to take home less per ride. That's not going to sit well with drivers.

Uber's reasoning for this move is that lower fares would encourage more riders, and hence drivers would get more business. According to Uber, similar fare reductions have seen success in other countries, but in places like the US, Australia and South Africa, these fare cuts have resulted in some drivers boycotting Uber and going on strike.

With this price reduction, is it cheaper to take a taxi or an Uber?

The way Uber calculates fares is based on both distance travelled as well as time taken. After the fare reduction, Uber now charges a base fare of $3, $0.45 per kilometre travelled, and $0.20 per minute. Previously, it was a base fare of $3.50, $0.50 per kilometre travelled, and $0.25 per minute.

Let's see how Uber compares with a Comfort Hyundai Sonata, which has the cheapest flag down rate of $3.20. Regardless of taxi company, taxi charges in Singapore are generally the same - $0.22 for every 400m or thereafter up to 10km, for every 350m or thereafter after 10km, and for every 45 seconds of waiting or less.

Say you take a journey from NEX Shopping Mall in Serangoon to Clementi Mall at 8pm - it's about 19km and will take about 25 minutes.

Based on the calculation, it will be cheaper for Uber riders if the ride occurs during the peak periods of 6am to 9.30am or 6pm to midnight. It will almost always be cheaper if the ride occurs after midnight, since Uber has no official surcharges for peak periods, though there may be surge pricing depending on the time and the location.

However, even with Uber's reduced fares, outside of peak periods it is still cheaper to flag down a taxi. That's assuming you can live without the convenience of booking an Uber for free.

So what's in it for Uber drivers then?

In Singapore, Uber has raised its minimum hourly guaranteed fare to at least $25 per hour for non-peak periods, with existing peak period guaranteed fares ranging from $27 to $36 per hour depending on the day and time. Presumably, despite the fare reduction, if uberX drivers were willing to meet the minimum requirements, they would still be able to earn at least $20 per hour (since Uber takes 20 per cent of your earnings).

This minimum hourly guaranteed fare is supposed to protect your earnings, since you'll earn at least that amount regardless of whether you get good fares or not.

What are these minimum requirements?

Uber requires drivers to maintain at least 1.5 trips per hour and at least 2 hours on the road. You will also need to accept at least 80 per cent of total trip requests and complete at least 65 per cent of those trips.

So… is it still worthwhile to be an Uber driver in Singapore?

As we pointed out earlier, the PDVL framework that the government is introducing is not very different from the existing requirements that Uber has for their drivers. Though it's still early to say for sure, we did predict that new regulations would eventually lead to higher costs. But for now, the real question for current and aspiring Uber drivers is whether they are willing to take advantage of what should be a higher demand.

With these fare reductions, it's even more important that Uber drivers try to achieve the minimum requirements for incentives. In order to maximise their earnings, Uber drivers will need to be smarter and more strategic in the way they choose their routes and their customers. While these changes might turn off a good number of Uber drivers, I suspect the majority will still take advantage of the flexibility of choosing when and where to work.

This article first appeared on MoneySmart

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