Analysis

In the driver’s seat

By Aditi Surie

8 June 2018

Do platform economies like Uber require a reframing of labour relations?
Photo: Nikita Gavrilovs / Flickr

Photo: Nikita Gavrilovs / Flickr

On 19 March 2018, drivers of ridesharing platforms Ola and Uber from several cities in India called for an indefinite strike, affecting commuters in these cities. Among the protesting groups’ core concerns was the discrepancy between what Uber and Ola had promised would be their total business, between INR 80,000 (USD 1183) and INR 125,000 (USD 1850) per month, and the actual amount the drivers – or driver-partners as these platforms call them – take home. The drivers’ earnings have been consistently falling. As one of the leaders of the protest said, “Ola and Uber had given big assurances to the drivers, but today [the drivers] are unable to cover their costs. They have invested Rs 5-7 lakh [USD 7400-10,356], and were expecting to make Rs 1.5 lakh [USD 2219] a month but are unable to even make half of this.”

Since 2015, the drivers on these platforms have protested, been on strike, filed legal petitions, and even resorted to self-harm, to get the government, aggregator companies, media and consumers to take their issues seriously. However, drivers’ associations across cities have differed in their approach to these demands, and, until now, protested in relative isolation. The most recent call to action, one of the first such attempts to coordinate collective actions of platform drivers in several cities, did not meet with much success, reflecting not only the difficulty digital service workers have in organising, but also how uniquely each Indian city’s taxi transport sector has emerged. The protest had the most impact in Mumbai, due to the political strength of the Maharashtra Navnirman Vahatuk Sena, the transport union of the Maharashtra Navnirman Sena, a Marathi nationalist political party, in the city. Yet, while drivers’ associations may be splintered by city and local economic histories, their grievances with platforms echo common sentiments. Yet few media reports have been able to capture the content and spirit of these demands, often running the risk of caricaturing the drivers as urban poor lacking any agency.

Market marathon

Founded in the United States in 2009, Uber came to India in 2013, three years after India-based Ola began its operations from Mumbai. The two remain the biggest online cab aggregators in the country. The number of drivers on these platforms is hard to estimate as numbers remain unofficial, but there are approximately 1.5 million drivers on Uber, Ola and smaller competitors. Uber India reported clocking a million rides a day last year, with similar figures from Ola. Since these companies offer substantially lower ride fares, they are popular with customers in the city. In Mumbai, for instance, public-hail taxis have been charging a minimum fare of INR 22 (USD 0.33), with INR 14.8 (USD 0.22) for subsequent kilometres, while in 2016, Uber and Ola offered economy rides (Uber Go or Ola Mini) at INR 8 (USD 0.12) or INR 11 (USD 0.16) per kilometre. Further, even as the fare surges at times, the platforms have additional offerings like door-to-door service, trip routing and navigation.

Since 2016, national and international platform dynamics have negatively affected the business of Indian drivers who use Uber and Ola. The trouble stems from the tight race in which both Ola and Uber find themselves in, nationally and internationally. Both companies have raised money through venture capitalists, but have found it extremely difficult to make profits over the years as they are forced to invest capital in beating their competition in an effort to command market monopoly. Uber, in particular, has shown a pattern of investing big and losing big in several markets, such as China, Southeast Asia and Russia. However, in India, it has consistently fought Ola to create the ideal winner-take-all market where profits are supposed to turn for these companies and eventually, they argue, trickle down to drivers. But this is a real challenge for Uber India given that Ola’s spread – at least 110 cities – is far greater than Uber’s at 31. As of early 2018, reports in financial media indicate that, despite all its efforts, with under 40 percent share of the online car aggregator market, Uber is still trailing Ola, which controls 56. Neither Uber nor Ola have profits that outstrip their investments currently, and profit margins remain low for companies and drivers, who have to invest in cars, smartphones and fuel.

The competition also works at the level of individual drivers’ businesses, where the minutiae of local platforms can affect income opportunities. This includes factors such as temporary migration within the larger regional economy and concentration of drivers in a given city. This, in turn, is affected by patterns of worker movements over time, during religious holidays or due to environmental variables such as rain. The drivers’ earnings come from a portion of the trip fare and ‘incentives’, which vary to keep the platform populated with online drivers. Both these companies offer packages of incentives to their drivers in the form of daily or weekly payouts, based on the number of trips or the amount of business these companies want their drivers to create. These are the main profit-making mechanisms for drivers in some cities and are how these companies try to capture market share and retain drivers on their platforms. But it is a dynamic, if not volatile, calculation that changes every week. Competition at all these levels has a direct bearing on drivers’ incentives, impacting their overall earnings. As a result, drivers are unable to plan savings, repay loans or maintain their cars.

Workers, entrepreneurs or owners?

Digital platforms like Uber and Ola have disrupted what are considered traditional modes of taxi sector employment, where the owner of the car hires a driver as an employee and charges clients a rate that is, in principal, regulated by the government. The cab aggregator apps have disrupted the old setting where taxi transport has been governed by municipal planning and regulation. Taxi transport has evolved through a variety of ways in India’s cities – often organically, not spearheaded by government, but by private enterprise with regulations retrofitted to allow municipalities to earn revenue and bring a level of standardisation to their service. Often, the city’s demand for taxis has been met by private or neighborhood taxi stands where drivers must rent or buy their own vehicles, and ‘attach’ them to the stand.

This disruption also changes the traditional employee-employer relationship. Globally, many courts and employment tribunals have questioned companies like Uber on their liability towards their drivers, invoking the company’s responsibility to full employment with benefits, legal assurances of work and surety of income. But the demands and claims made by the platform drivers in the March protests do not place any real hope in full-time employment. Their claims to monetary redressal are based on them being entrepreneurs – through asset ownership and capital investment – rather than being owed a salary or government stipend.

For instance, in the list of demands put forth by the Sarvodaya Drivers Association of Delhi (SDAD) – which started to successfully mobilise platform drivers in 2017 and organised the recent strike in Delhi – there was no mention of placing the company’s liability within the framework of formal employment. Their demand was to safeguard and protect investments made by platform drivers in pursuit of the scheme of earning as marketed to them by companies like Uber and Ola. The assets – car and smartphone – the drivers were told, were sound investments that would accrue continuous earning. But the drivers found that their earnings varied sharply, and unfairly, while their costs of operating capital did not. They are, therefore, seeking to maintain the rationality of their investments, and hold larger market players to their promises.  Significantly, this claim is that of an economic actor with agency which needs state mechanisms to safeguard its capital. Capital, after all, isn’t only the purview of the elite, middle-class, well-educated entrepreneur.

The scale of asset ownership has risen, buoyed by an ‘ease of doing business’ for drivers, which involves Uber and Ola providing new drivers loans or vehicles on lease, for getting them ‘onboarded’ and invested in the platform. This has placed them in a structural vulnerability that is binding and unfair, and different from the nature of working class precarity in urban India. This is reflected even in the SDAD’s demand that drivers get the promised INR 125,000 (USD 1850) per month in business – ie, INR 60,000 (USD 888) to INR 80,000 (USD 1183) approximate net earnings after deductions from car loans and commissions – while the minimum wage in Delhi for semi-skilled work is INR 15,296 (USD 226).

It is important to note that there is a variety of ways that drivers acquire these cars. For instance, there are car owners (mini-aggregators) who hire drivers to work on the platform. These are not the drivers that are leading protests and strikes. Car owners who drive their own vehicles on platforms figure as the most significant share of the platforms’ service providers. They invest to work.

The role of the state

Groups like SDAD are asking the state to develop a regulatory relationship with companies like Uber and Ola through the government-run Standardisation Testing and Quality Certification (STQC), which acts as a third-party certification for both public and private hardware and software. There is an underlying acknowledgment in their demand of how the tripartite relationship engendered through full employment – i.e. between state, worker and firm – is not a reality for most urban Indians. They recognise that in these times of ‘ease of doing business’, any effective curtailing or regulation of platforms will come at the cost of the workers and not the employers.

Despite the fluctuations in the platforms’ offerings to drivers, the ways in which different state actors have looked to regulate these companies and their marketplaces come off as anti-worker, anti-micro-entrepreneur and anti-driver. So far, it appears that in India, no court, tribunal, municipal, state or central government, or any regional transport authority has enacted anything substantial in protecting platform drivers as workers, employees or micro-entrepreneurs. In fact, the platform model, tacitly or openly, has the acceptance of, and collaboration with, governments at all levels. For example, Uber and Ola have signed MOUs for skilling and employment generation in Telangana, Maharashtra, Haryana, and Tamil Nadu, among others. These MOUs aim to increase investments, expand their user base and market share, and influence policy making in the states. For the state governments, this also holds the promise of more employment. Uber’s guerilla tactics of breaking new markets ignoring local regulations has changed and the arrangements with state governments are an indication that India’s market is vital to its sustainability internationally.

From the direction of the state, there continue to be pro-consumer responses to these driver protests. In 2017, for instance, the Delhi and Mumbai High Courts blocked drivers’ associations from halting the functioning of Ola and Uber platforms. In a telling judgement, a judge of the Delhi High Court permanently restrained SDAD from interfering in the services offered by the ridesharing companies.

Future imperfect

The aggregator or the platform model is one of the world’s most utilised business models to spread innovative technologies across economies and geographies. The platform generates income opportunities, and could potentially increase market access and financial inclusion. It also generates data, which is increasingly valuable to private capital and public administrators.

Pre-existing taxi sectors in various countries have been at the forefront of making challenges to transport platforms in courts and labour tribunals. In the United Kingdom, Uber was told to treat drivers as having minimum-wage rights and not self-employed. In Brazil, there were concerted attempts to classify Uber and similar transport platforms (such as Cabbify and 99) as a public service, granting municipalities authority over its functioning and severely limiting where their cabs could ply or how drivers were onboarded. This parliamentary bill was watered down at the last minute after appeals by Uber’s CEO and drivers’ groups that contextualised this work within Brazil’s post-recession high unemployment rates.

Indian drivers such as those represented by SDAD are acutely aware that the stability, durability and security of work and life have not come from contracted formal employment. Interestingly, the protesting drivers do not claim rights or redressal based on their labour and hard work; they expect the State to hold corporations like Uber and Ola to account for their marketing ploys. There is much to criticise about Uber or Ola, but it is simplistic to indict the very model of micro-entrepreneurship or argue that, behind all the marketing lingo, it is essentially a manipulative employment relationship. This ignores the fact that self-employment and micro-entrepreneurship have characterised how generations of informal workers in Indian cities have worked.

In the future, groups like SDAD will face the same issue that all driver associations do, and as most worker movements in India do – how to get the protesting drivers to forgo earnings for protest. Meanwhile, car-owner-drivers associations are springing up across the country – from the Telangana Four Wheeler Driver’s Association to the Delhi Commercial Driver’s Union – and each will have to grapple with the specific challenges of their local economies and questions about the future of work in India’s digital economy.

Our confusion in knowing whether platform drivers are entrepreneurs, exploited workers or asset owners who have been defrauded has led many to analyse these strikes and this new form of work through older tropes of labour against capital, or state against worker. However, these reflect neither the drivers’ nor the company’s demands.

Is perhaps the consumer court the right place for the next Uber and Ola driver battle to be won? Where does an entrepreneur take their public grievances with various players in the value chain? How can we use legal precedence for penalising companies with misleading marketing campaigns? Entrepreneurs in India have safeguards against bankruptcy, and, not much else. Given the pace at which technological innovations are disrupting the notion of work and entrepreneurship, a comprehensive set of legislations and policies to protect this new worker-entrepreneur has become necessary.

~Aditi Surie is a sociologist at the Indian Institute for Human Settlements and researches the urban informal economy, technology and late capitalism.

One Response to “In the driver’s seat”

  1. Nav says:

    Thank you for articulating this vital information. This helps to understand the drastic change in behaviour of the drivers since the past 6 months from an essential viewpoint!

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