DBS study highlights the financial strain faced by platform workers amidst rising living costs.
A recent DBS study reveals that platform workers, such as delivery drivers and private-hire car drivers, are spending more than they earn, tapping into their savings to cover daily expenses. For the second consecutive year, platform workers’ savings have fallen to an “unhealthy range,” highlighting the financial challenges these gig economy participants face.
The study, which surveyed 1.2 million retail customers with DBS accounts, found that the expense-to-income ratio for platform workers increased to 112% in May 2023, up from 107% the previous year. This means that for every dollar they earn, platform workers are spending S$1.12, a worrying trend compared to the median DBS customer, who spends just 57% of their income.
The savings of platform workers have also dwindled further, down to 1.7 months’ worth of expenses in May 2023, compared to 1.9 months in 2022. This is far below the recommended 12 months of savings, especially for those with unstable income streams. In contrast, the median customer has savings covering 3.5 months of expenses.
With over 88,000 platform workers in Singapore, the growing number of individuals in the gig economy face uncertain financial futures. Financial experts warn that without proper savings and contingency plans, these workers are at greater risk of financial instability during low-earnings periods.
To address this, digital banks like GXS Bank are developing tools to help platform workers manage their finances better. Features like the “Saving Pockets” allow users to allocate funds for specific financial goals, earning a higher interest rate than traditional savings accounts. Additionally, GXS has eliminated penalty fees for early withdrawals, giving workers more flexibility in times of need.
DBS Bank also advises platform workers to contribute to their Central Provident Fund (CPF) to take advantage of attractive interest rates, which can help build long-term savings for retirement. With these measures, there is potential to improve financial security for platform workers, despite the challenges posed by fluctuating incomes and rising living costs.
