Passenger fares and driver's wages (Part 1 of 2)

If we must use the passenger fare rate as an urban planning tool, we must rethink the current way we fix it and collect it, and analyze and set it at a macro level.  More often than not, we keep on looking at the micro picture, ensuring as much as possible, that the fare spent will be equivalent to the actual cost of transporting a passenger, all other externalities considered – income of the investor, time of day fluctuations, load factors, route profitability, etc.  Then we tend to fix so that “it will be just right,” and lose the potential for public good in the process.

Before we can even move forward, we have to look at existing traditional practices closer, as well as try to look at how other countries and cities are doing them, especially the more advance and developed ones.  We always ask why we are not as developed as other countries, and yet we continue to do the things we were doing in the last century, unwilling to try the ways more advanced countries do things.  If we must develop and grow more, then we should be willing to change, try new things especially those which work in others before us.

Let’s go back to the transport industry.  There are three players – the operator, the driver, and the passenger, the government being the fourth and just the regulator.  Except for vehicle registration fees, drivers’ licenses, traffic violation penalties, and other fees and charges, the government does not participate in the financial transaction – it does not earn nor lose.  It is this distance, the absence of “risks,” which prevents it from participating in the process and using its muscle to influence urban physical and economic growth.

Traditionally, the operator pays the driver to drive the transport vehicle.  There are two common arrangements – boundary system, and commission basis.  In the boundary system, the driver pays the operator a fixed rate; anything he earns above the boundary is his daily earnings.  By commission basis, the driver is given a certain percentage of the daily collections.  There might be some combination of both, but basically this is how most driver-operator arrangements are done in the Philippines.

The passenger pays the driver and operators for the ride.  The fare is given directly to the driver (or “conductor” if there is one), and this is shared between them by either of the two common ways described above.  The risks of income or loss rests with the driver-operator partners which results in cut-throat competition – drivers fighting for passengers and racing through the city streets to do so, compromising safety.  In a city called Bogota, capital of Columbia, this was described as “guerra del centimo” in the last decade.  Filipinos usually know enough Spanish to understand what it means!

The first time I visited Japan more than 20 years ago, I asked a bus driver how much he earns.  “30,000 yen a month,” he said.  That was much more than what I was earning at that time!  And he worked 6 hours a day, had insurance, health care, overtime, day offs, and other company benefits!  He’s not overworked, had enough rest and vacation, and enjoys life without racing through the streets of Tokyo.  Why?  Because he earns a fixed income.

The driver is better off, but the passenger is much better off.  Since they’re paid fixed rates, they don’t go racing and fighting for passengers.  They don’t stop in the middle of the road picking up passengers nor cut off other vehicles, causing chaos.  And jeepneys can be worse because they’re smaller and more maneuverable.  We are implementing this for buses in the Philippines, and operators are up in arms!  Strange … there must be something we do not know … Why will an operator deny his driver and his family, a better life?  And more importantly, again, why are we opposing something which apparently worked in all more developed countries in the world?  It’s a wonderment!

First step – we have to get out of the boundary or commission system.