Taxi Aggregators Are Evolving A New Kind Of Employment. Can Regulators Keep Up?

Online taxi aggregators like Ola and Uber have created massive shifts not only in the way people commute but also in employment. They have become necessary as an alternative travel option for commuters.

There are, however, some important questions that remain unanswered. Are the taxi aggregators (Uber or Ola) formal employers, or are they just a platform that brings together a group of self-employed drivers? Are their drivers entitled to employment benefits such as pension or insurance? Who has the liability in case of accidents?

The questions came to light when two drivers from the United Kingdom (UK) took Uber to court in 2016, claiming that the company should provide them with the benefits of formal employment such as minimum wage and leaves.

Uber maintained its official stance that it operates only as a platform for self-employed contractors (drivers) and not as a traditional employer.

The UK court, however, rejected the argument. The judgment once again started the debate on whether workers on technology platforms should be considered self-employed or as an employee.

The same issue came up before the Delhi High Court in May, and the matter is still pending. This central question has significant repercussions for the gig economy, especially for a country like India where such platforms are employing a growing number of people.

According to an Uber spokesperson, the company employs 2, 85, 000 driving partners and receives a vast number of sign-ups every day. The trend with both the major players has been to see these “driving partners” as independent contractors who are just taking advantage of the tech platform provided by the company.

According to Amit Jain, president of Uber India, only a small number of individuals have complaints, and their opinion cannot be taken as the standard. A driver’s earnings may vary widely according to his preferences – where, when and how much or little he chooses to drive. Currently, 80 per cent of drivers across India who are online for more than six hours a day makes between Rs 1,500 and Rs 2,500 net, after Uber’s service fee.

Since the drivers are not classified as employees, they cannot avail social protection benefits such as minimum pay or insurance. Here, the risk is transferred to the individual driver who invests his capital and labour, thus making them vulnerable to external shocks (market or regulatory fluctuations). This becomes even more complicated as the drivers do not function as a typical self-employed person but are rather connected to the platform’s vulnerabilities as much as its advantages.

The companies typically start their service in a new city with high incentives for drivers and reduce them over a period to arguably sustain their dynamic business model. Lured by the initial monetary promise of Uber and Ola, drivers often invest in a car. While the amount of money they can make does indeed go down over a period they’ve been mostly able to pay off their loans.

What is missing though are the benefits of a ‘regular’ employment, but given that jobs are so scarce what are the alternatives?

This situation also brings us to next argument about minimum wages expected by the taxi drivers. For example, some drivers do complain that their earnings and incentives have reduced over time. However, Uber argues that the market is double-sided and as a platform it has to cater to both drivers and riders. An Uber spokesperson says, “It’s business critical for us to make Uber the most attractive choice - The future of our business depends on making driving with Uber the most attractive choice. We’re working to balance attractive driver earnings with affordable rider pricing."

Thus, the companies claim to walk a tightrope of balance themselves.

While the debate around the nature of employment on online platforms is raging worldwide, it's important to see it in the context of India where around 90 per cent of the labour force still works in the informal sector as self-employed or casual labourers.

India currently needs to focus on the overall health of its economy which is linked to the health of its labour force and not just big technology giants.

The rise and expansions of gig economy are real and are here to stay. Thus it would be in everyone’s interest to make the best out of the situation. The companies already seem to be stepping up their provisions for the drivers especially in the light of recent protests and court cases.

Uber, for example, has launched UberSAMAJ - which is a dedicated driver partner community for the company. The forum would hold focus group discussions across multiple cities and the teams including the leadership team on issues such as solving driver tickets and listening to their concerns and thus ensuring that a better communication channel is established between the management and drivers to come up with the best possible solution.

However, private sector solutions alone will not be adequate unless accompanied by structural government-backed interventions.

It is time that our regulatory authorities wake up from their lethargy and work out a new policy for the protection of the workers in this current and technology-driven industry, and it would best if they can come up with such policies that avoid hurting the very industries whose beneficiaries they claim to protect.

This article is part of our special series on urban mobility.

Also Read: India Is Better Off With Self-Employed Uber And Ola Drivers