Rising Fuel Costs Cripple Gig Workers, Spark Government Intervention

A blockade in the Persian Gulf has dramatically increased fuel prices, severely impacting Vietnam’s gig economy and prompting emergency measures.

The escalating cost of diesel and petrol is creating significant hardship for transportation workers across Vietnam, particularly those utilizing ride-hailing applications. The situation is directly linked to Iran’s enforced blockade of the Strait of Hormuz, which has disrupted global oil supplies and driven up prices within the country. In Ho Chi Minh City, where over seven million motorcycles navigate the congested streets, drivers like Nguyen, a motorcyclist operating through the Be app, are struggling to make a living. Nguyen reported that fuel expenses now consume half of his earnings after a typical workday, with a recent fuel purchase costing 120,000 Vietnamese dong ($4.56) for a journey lasting approximately seven to eight hours, which generated only 240,000 Vietnamese dong ($9.11). This surge in fuel costs is impacting the operations of many gig workers, with numerous drivers considering leaving the app entirely due to unsustainable profits. The rise in prices is exacerbating existing economic pressures on Vietnamese citizens. The Vietnamese government responded to the crisis by suspending environmental taxes on diesel, petrol, and aviation fuel, a move intended to alleviate the financial burden on consumers. Prime Minister Pham Minh Chinh initiated this policy last month, aiming to stabilize prices until April 15th. Experts believe this intervention is crucial for maintaining public satisfaction and ensuring economic stability. Nguyen Khac Giang, a visiting fellow at the ISEAS-Yusof Ishak Institute, explained that the government's action is a necessary step to address growing citizen frustrations and prevent broader economic instability, considering Vietnam’s vulnerability to international disruptions. However, the tax suspension represents a significant financial loss for the government, estimated at $273 million. This strain is visible across the economy, with increased crowding on public transport and domestic airlines like Vietnam Airlines and Vietjet Air reducing their flight schedules. Gig workers, already facing limited labour protections, are especially vulnerable to these volatile fuel prices. Research fellow Do Hai Ha highlighted the unpredictable nature of their income, influenced by factors beyond their control. The situation underscores Vietnam’s dependence on international trade and its susceptibility to external economic shocks.