Even if Uber does not operate in your city, you’ve probably heard of the popular taxi app company.
Following a successful US$1.2 billion funding round last year, Uber is now valued at a mammoth US$40 billion.
However, it has not been all plain sailing for the fledgling company.
A number of scandals and regulatory battles plagued its reputation in 2014.
From a trade union perspective, Uber’s brazen attempts to skirt around laws that guarantee both passenger safety and fair competition in the industry have been a major cause for concern.
A darling of the so-called sharing economy, Uber is basically a ride share service connecting passengers with independent drivers.
While UberBlack and Uber are independent livery services, UberX is the company’s peer-to-peer platform where registered drivers use their own vehicles.
Rather than a dispatcher sending a licensed taxi in response to a request, the Uber smartphone app matches passengers with drivers. For that service, Uber takes 20 per cent of the fare.
Taken at face value, it is a pretty amazing concept: a simple match-making platform that brokers contracts between passengers and drivers.
It is for this reason that Uber believes it is above the law.
As a company spokesperson succinctly put it, “we believe that there are no regulations that imagine the kind of service that is made available via this technology platform”.
On the contrary, it is exactly companies like Uber that need regulating.
Traditional taxi companies are subject to numerous regulatory obligations meant to protect passengers and guarantee decent working conditions for drivers.
Indeed, regulated drivers must, among other things, hold licences, ensure their vehicles are equipped with proper safety devices and maintain stringent commercial insurance policies to cover accidents on the job.
Uber does very little of this.
While, for example, licensed taxi drivers in New York City get screened by the Taxi and Limousine Commission to ensure they are fit for the job, Uber has lobbied hard to be exempted from this obligation.
They have effectively privatised the vetting process by bringing the function in house.
The widely reported passenger rape case in New Delhi and other similar incidents clearly show that this system is flawed. In fact, in California, prosecutors have sued Uber for misrepresenting and exaggerating the extent to which they conduct background checks on drivers.
Uber drivers are called ‘partners’ because they are considered to be independent contractors or self-employed individuals.
As they are not classified as employees, these drivers do not enjoy basic labour and social security rights.
Therefore, between the loans the company offers its drivers to buy cars and the smartphones it rents out to them, there are a whole host of hidden costs.
In addition to covering their own health, workers compensation and retirement plans, drivers must also pay for petrol, vehicle maintenance and insurance.
Given the significant costs of obtaining commercial vehicle insurance, the company has been known to deceitfully advise its drivers to buy personal insurance despite these policies not always covering accidents on the job.
Uber’s secondary policy does not cover drivers either.
An employer in all but name
While it is arguable that self-employed individuals should compromise on employee benefits to enjoy the freedom of running their own professional lives, it does not hold water when you are an employee in all but name.
Uber’s classification of its drivers as partners is a classic case of bogus self-employment.
Although Uber drivers carry their own insurance and pay for petrol and repairs, they have no say in Uber’s pricing policy.
Indeed, Uber can inflate fares during peak demand periods (the controversial ‘surge pricing’ tactic) or reduce them on a whim.
Not surprisingly, the company’s claim that drivers can make vast amounts of money over a short period of time has been roundly debunked.
In addition to having their fares set for them by Uber, drivers must also follow a series of detailed requirements regarding the cleanliness of their cars, pick-up times and conduct with passengers.
Failure to abide by these conditions can result in termination. Uber also retains part of the gratuities received by drivers.
When all these elements are summed up, it is safe to say that Uber would fail the legal tests for independent contractor classification in most countries.
It is for these reasons that regulators from Seoul to California have been on Uber’s case from day one.
However, the company’s rapid expansion despite the numerous rulings against them has attracted the ire of the regulated taxi trade. Indeed, taxi drivers in cities including Paris, Rome and London have staged impressive protest actions and strikes.
It is also no surprise that disgruntled Uber drivers have been making their voices heard and forming unions, some supported by traditional taxi unions.
The International Road Transport Union (IRU), the industry body representing taxi companies worldwide, and the International Transport Workers’ Federation (ITF) have also joined forces to call on regulators to scrutinise commercial transport services offered by self-proclaimed ride sharing companies like Uber.
Of course Uber is not the only ride sharing company with a far from perfect record.
However, as the market leader, Uber must be challenged now before its competitors emulate its unsavoury practices.
It should also be said that the regulated taxi trade has its fair share of problems.
That does not mean however that belligerent companies like Uber should be given a free pass by regulators.
Only fair competition can generate better and safe services for passengers across the board. Indeed, it should not be forgotten that it is the regulated taxi trade that has been leading smartphone applications implementation in recent years.
The battle against Uber is not one between old and new. It is not a war against technology or progress. It is simply a fight to avoid a race to the bottom.