Inside Enterprise Issue 11 – Incoming Issue “Masterstroke”
When I first met *Simon, he was waking at 4AM every morning and working for Uber up to 70 hours a week, constantly shackled to the seat of the family Camry. A middle-aged father of three, he was pocketing as little as $900 some weeks. After tax, GST, insurance and maintenance deductions, he had little breathing room for surprise expenses. Financial difficulties sat on the horizon, primed to emerge at a moment’s notice. At the time, Simon’s partner was working longer hours to compensate for his unstable income. The pair had only recently pulled their infant daughter from local childcare in favour of a distant, but cheaper, centre. Last year, Simon, through no fault of his own, was rear-ended whilst working. The family took out an emergency personal loan to cover public transport costs and rent while the car was being repaired. These financial difficulties came to an intractable head earlier this year. In the early hours of the morning and on his final trip of the night, Simon was assaulted and car-jacked. The resulting loss of the vehicle and Simon’s medical costs forced the family to relocate and rebuild. Uber refused to pay for the medical costs or property damage. Simon hasn’t driven since.
Simon isn’t a real person but he’s not fake either. His story is the synthesis of common threads in the ride-sharing industry (Herald Sun 2018; The Age 2018; Sydney Morning Herald 2018; Yahoo News 2018). Over a five-month period in 2018, I used a combination of Uber and Ola for trips ranging between 15 and 25 minutes long, as often as up to nine times a month. During these trips, I spoke to an array of drivers, asking open and constant questions like “What could Uber Management do to enhance your experience as a Partner-Driver?” and “What have your positive and negative experiences with driving Uber been?” I took notes on my phone. In all cases, I flagged that I was collecting information for a student-run university publication and that I would presume their responses to be on the record unless I was otherwise advised. In any case, all comments have been depersonalised. Naturally, not all drivers were receptive to these prying questions. I respected that.
The result of these conversations is compressed here into a discursive blend of the drivers’ ambitions and their feedback for the future of the industry. This piece is not and makes no attempt at an empirical study. I simply try my best to put forward the voices of these drivers.
Since Uber’s arrival in Australia in November 2012, the ride-sharing industry has boomed. In 2018, Uber alone accounts for 70.5% of the Australian ride-sharing market, 20,000 active driver-partners and 1.3 million regular riders in Sydney (ABC 2018), a figure which is projected to increase in light of the market entry of international competitors like Shofer, Taxify, GoCatch, Shebah and more recently, Chinese ride-sharing giant DiDi as well as persistent rumours of American-based Lyft’s planned expansion overseas (Mashable 2017). With a market volume of USD $563 million in Australia and user penetration of 11.2%, Australia ranks just outside the top five countries in the world for user penetration of the ride-hailing industry (Statista 2018).
Amid Sydney’s perennially pesky public transport challenges, its little wonder the industry has gained such traction. When the idea of Uber germinated in the minds of founders Travis Kalanick and Garrett Camp whilst struggling to find a cab on the snowy avenues of Paris in 2008, the app-driven concept was predestined to become a disruptive force. Disrupt, Uber has. Without owning a single fleet of vehicles, Uber has ascended into an internationally recognised brand. Since 2012, the price of Taxi License Plates has dropped from $430 in 2012 to $217 in 2017 (Business Insider, 2017) It’s old-world competitor, the humble taxi, now static in taxi ranks all over Australian cities, is very much on its last legs, resorting to litigation through a $500m class action against Uber (SMH 2018). The gap between UberX’s 4.28 minutes average wait time and the taxi average of 7.47 minutes continues to widen (Deloitte Access Economics 2016).
For consumers, ride-sharing has been convenient, an intoxicating and seductive alternative to the existing taxi market. A 2013 advertisement featured a glossed over, suited male getting ready for the day and ended with the motto “Uber. Everyone’s Private Driver.” The connotations of prestige and luxury which first pervaded Uber’s marketing have since been substituted with images of mass-market accessibility, diversity reflecting the more price-conscious pockets of its customer base, following the introduction of UberPool in Sydney and Melbourne and accompanied advertisements claiming to be Australia’s “most affordable Uber ride.” Demand continues to remain high and the ride-sharing industry is still “anticipated to continue growing strongly over the next five years, albeit at a slower rate than the previous five-year period.” (IBIS World 2018).
For consumers, ride-sharing has ascended to a level of public omnipresence. It remains a fixture of a good night out, a necessity for food orders in inclement weather, an alternative to long walks to public transport hubs, or a back-up plan for when public transport options collapse. With significant market saturation, the industry has seen a continuous flow of penetration pricing and other price-competitive measures including passenger referral incentives and discounts. At the aggregate level, this has limited the industry’s revenue in Australia. In the short term, the customer benefits greatly. More drivers on the road means shorter wait times, greater accessibility and the opportunity for cheaper travel. In any competitive market though, a lack of regulation over supply endangers profitability and labour conditions in the long-term, leaving a far more forlorn portrait, especially for the forgotten voices of the industry.
Uber’s legion of aptly named ‘partners’ comprises a demographic with few surprising aspects. A 2015 report commissioned by Uber and examining driver demographics in 20 American markets revealed that Uber drivers tend to come from diverse racial and educational backgrounds (Hall and Krueger 2015). Much of this data, however, resembles the taxi industry, given that around 49% of Uber’s partners had worked as a driver at some point in their career prior to partnering with Uber. The differences largely lie in education, gender and age. Around 20% of Uber’s partners are aged 18-29, compared to 8% of taxi drivers. 14% of Uber drivers are women, greatly surpassing 1% of taxi drivers, and almost half of Uber partners had a college degree or higher, relative to 18% om the taxi industry. A product of its time and the novel structures of the share economy, Uber’s workforce is leaner, younger and more diverse at a time when the taxi industry continues to get older (KPMG, 2009). Uber’s image is certainly one of progressivism and perhaps rightly so. It’s website proudly preaches the goals of inclusivity, listing 14 Employee Resource Groups (ERGs), internal employee communities spanning from UberAble, a community for caregivers and employees living with disabilities, Salam for Muslim employees, Asian employees, immigrants, women in engineering, Jewish employees, LGBTIQ+ and parents and caregivers. But, scaling back Uber’s corporate ethos reveals something far less progressive, equitable and fair for the majority of its workers.
I obtained Uber’s contracts from a former Uber driver. At first sight, Uber’s contracts are utterly confusing. At their best, they amount to an undesirable, unharmonised smorgasbord of more than five agreements administered by Uber’s business entity name in Australia, Rasier Pacific Pty Ltd. The proper substance of the contracts reveals a company which has contracted out of legal vicarious liability and most facets of Australia’s employment law system which ultimately prescribes a job with a volatile income alongside limited safety guarantees.
For one thing, employing a completely unrelated business entity name separate to ‘Uber’ is a tactical public relations move. A Google search for Uber is filled with results ranging from official marketing and recruitment drives. A Google search for Rasier Pacific is far more sinister, returning a front page with results ranging from court judgments, union reports and media releases from workplace lawyers. These agreements include various addendums, for instance, the UberEATS Service Fee Addendum (Sydney) dated 1 December 2017 and Rasier Pacific VOF Service Fee Addendum dated 18 July 2017.
The Services Agreement, the core contract signed by Uber drivers, has rapidly evolved into a boilerplate template for other ride-share companies in the broader industry. Clause 28.1 of this agreement, as at 2017, provided that all drivers are independent contractors who expressly agree that the agreement is “not an employment agreement, nor does it create an employment relationship including from a labour law, tax law or social security law perspective.” This status was upheld by the Fair Work Commission in January 2018 (AFR 2018) but the debate remains far from settled. In its landmark ruling in Klooger v Foodora Australia Pty Ltd, the Fair Work Commission determined Foodora delivery riders were employees and not independent contractors (SMH 2018), leaving the analogous contractor status of UberEATS drivers in some doubt. For now, being an independent contractor has several implications for Uber drivers.
First and foremost, it deprives them of legal power and protection. In a familiar story within the industry, Uber driver Saeed Shah was dragged from his vehicle and car-jacked (SBS 2018). Uber subsequently published a statement disclaiming any financial responsibility for Shah’s medical bills and the loss of his car. Without an employment relationship, Uber bears no legal obligation to provide workers compensation in the event of injury during the course of employment. Amongst the drivers I spoke to, both verbal and physical confrontations were fortunately uncommon. However, this might be skewed by the fact that drivers who experience negative interactions with passengers are more likely to stop driving during more dangerous and unsociable periods such as late evenings or stop driving altogether, as occurred in Shah’s case. Without recourse to the Workers Compensation scheme and the possibility of recovering future economic loss, drivers who suffer physical and psychiatric harm are left with a contractual deficit in legal protection against injury and the resultant loss of income. Whilst passengers are protected by an Uber driver’s compulsory third party (CTP) insurance, the burden rests on injured drivers like Shah to pursue legal remedies at civil law against perpetrators.
Uber drivers have gravitated towards the apparent low costs of driving with Uber compared to the traditional taxi industry’s license plate costs, testing and training commitments. Taxi companies like Sydney’s Silver Service or London’s Black Cabs continue to employ stringent training. London’s famous ‘cabbies’ sit a self-assessment, written examination of 25,000 streets and 20,000 landmarks, two oral tests, collectively known as the “Knowledge Test.” On the other hand, it’s not uncommon for Uber drivers to have downloaded the Uber app and begun driving within a week of securing an Australian Business Number (SMH, 2018). However, the costs of driving for Uber rapidly stack up. Clause 2 of the Services Agreement requires drivers to “provide all necessary equipment, tools and other materials” at the driver’s expense. Much like the Taxi industry, Uber drivers bear the costs of the car, its fuel and routine maintenance, insurance and tax. But even more than Taxi drivers, there are further costs in phone data and drivers agree under clause 15 that the app may “consume very large amounts of data.” In that same clause, Uber advises that the mobile device used for navigation through the Uber app should “only be used under a data plan with unlimited or at least very high data usage limits.” The costs certainly add up.
The disparity in power between Uber and its partners is pronounced, shifting significant risk onto its drivers. Uber retains the power to unilaterally change the service fee and therefore, the commissions its drivers pocket, at any time, without providing any reason (Clause 10). Further, the availability of customers and the app is not guaranteed (Clause 25). In December 2018, a global outage left drivers unable to work and claim their earnings (News.com.au 2018). Even the continuation of the contract terms as signed is put in doubt because Uber can modify these terms at any time subject to the provision of two weeks’ notice (Clause 30). In 2016, Dean of Sydney Law School and Labour Law Professor Joellen Riley remarked that she would “be loath to sign [the contract]” (SMH 2016) and for good reason it seems. The contract assigns sole discretion to Uber to control the economic livelihood of its drivers, reserving the right to deactivate or restrict a driver from accessing the app ‘at any time’ (Clause 4), leaving Mike Ozie-Igiehon $80,000 out of pocket when after deactivation, he defaulted on a car loan which had been spruiked by Uber (SMH 2016).
A substantial portion of drivers I spoke to said that Uber over-prioritises customer demands, often leaving drivers in difficult or unsafe situations. Ramad* said that between Uber’s relationship with customers and drivers, there was an “80% tilt towards customers.” In support of these claims, most suggested that initiatives like UberPool had been excellent for attracting the price-conscious segment of the market but generated limited advantages for drivers who face less commissions, increased navigational challenges and the risk of passenger disputes. One driver told me it was common for time-conscious passengers in UberPool to complain when detours were made for other passengers. These complaints are then channelled towards the driver in the form of negative ratings, increasing the possibility that the driver falls below Uber’s minimum rating and is deactivated. On online communities such as UberPeople.net, UberPool has the nickname of “Uber Poo” (Uberpeople.net 2018) because it leaves drivers in a double bind. One forum user suggested that where there is only one passenger, the driver loses money because of Uber’s larger commission in Pool. Where there is more than one passenger, a driver runs the risk of receiving multiple negative ratings. Numerous drivers also suggested that the driver’s rating of passengers functionally “meant nothing” while passenger ratings of a driver substantially affected a driver’s job security, continued income and reputation. One driver told me that “drivers don’t really care about passenger ratings” and rather, “when the app goes bing, I take the job…I don’t refuse a ride because a passenger has a 2 or 3-star rating.” The ratings system gives consumers managerial power over workers, a responsibility open to abuse (Scholz 2016). Driver ratings run the risk of being given subjectively, flippantly or on an arbitrary basis like the smallest greeting, gesture or driving mistake. Passengers are not required to give feedback justifying that low rating. When low ratings are given without justification, self-regulation of good driver behaviour is jeopardised. There is limited transparency and no right of reply or appeal process for extremely low ratings. Instead, when drivers drop below the acceptable threshold of around 4.6 out of 5, Uber ultimately reserves the discretion to suspend or deactivate the driver without notice and without reason (Business Insider 2015).
Most drivers corroborated this sense of feeling unimportant and not cared for by Uber management, possibly reflecting a broader sensation of being atomised by the auxiliary labour market in the gig economy. “If one fish dies in the ocean, no one cares” one driver told me. Drivers are not made to feel like they are part of Uber’s organisational ethos. The Services Agreement contains no limitation on the amount of ride-sharing companies a driver can drive for. Accordingly, many operated numerous apps at once, shifting between Uber and its closest Australian competitors, Ola and Taxify. Drivers who had conducted a significant number of trips and maintained a high rating with positive feedback from passengers felt unmentioned, unrewarded and ultimately undervalued by Uber. However, this outcome is unsurprising in the gig economy. Uber ultimately has no need for retention of any particular drivers, good or bad. Despite comprising the bulk of Uber-affiliated workers, drivers have little organisational standing. When a driver deactivates their account, they are not asked to fill out an exit or feedback survey. In effect, they have little say in the organisation’s direction and more broadly, limited share in the share economy. In 2017, now former Uber CEO Travis Kalanick yelled at an Uber driver when the driver questioned the rising standards and lowering prices (The Guardian 2017).
A final challenge arises from the absence of any statutory cap on ride-share drivers in any Australian city. In mid-2018, New York authorities restricted the number of licenses granted to Uber drivers (New York Times 2018). A statutory cap remains in Uber’s interest because a glut of drivers outstrips demand, leaving drivers with no consistent wages and worsening congestion, attracting the ire of regulators (New York Times 2018). Theoretically, you and everyone on your street could sign up to be an Uber driver-partner tomorrow. Barring those eliminated by police checks and incompatible vehicle requirements, massive increases in ride-sharing drivers on the roads remain unchecked. Whilst more drivers on the road leads to greater reliability and availability as well as happier customers, driver livelihoods suffer first. One driver told me that “three years ago, there was a lot more money to be made. These days, I drive as far north as Palm Beach for trips on some days”, estimating that it was possible to make around $50 an hour on weekends in 2015, compared to only $30 now. The same driver attributed this decline to the demise of the initial passenger craze over ride-sharing. This is a familiar story. Sydney’s Uber drivers have driven as far down south as Wollongong where the volume of fares has been an attractive alternative to the saturated ride-sharing market in Sydney (SMH 2018). Another driver said that on a good day, they would be driving passengers for “70% of the day.” Uber drivers are capped at 12 hours a day for safety reasons. As more drivers hit the roads, drivers, working 12 hours a day, driving passengers around half of that total time, paying fuel expenses and increased commissions to Uber, they may ultimately earn less than the minimum wage. According to existing research, this already occurs. Uber drivers make an average of $14.62 an hour (Australia Institute 2018).
Some drivers remain optimistic. One told me that a little planning went a long way, avoiding an over-saturated driver market on Friday nights and instead driving early on Saturday and Sunday mornings. Another said that the first generation of Uber drivers, many of whom joined following the Baird Government’s legalisation of Uber in 2015, were now leaving the market as consistent with Uber’s high attrition rates. Yet, at the very minimum, this left space for new drivers. None of this denies the fact that Uber is a distinctly seasonal occupation with an otherwise low pay, high risks and long hours (Business Insider 2018). Expecting a stable wage from driving has proved fraught for many, especially Uber’s younger drivers who are more likely to rely on Uber as a buffer job. The majority of drivers I spoke to only drove Uber part-time. “The best money is made around Christmas” was a recurring truism.
Although caught in an unsustainable Hobbesian nightmare, there is a temporary way out for drivers. Competitors like Indian-owned Ola and Chinese-owned Didi both provided competitive driver commissions as part of their market entry strategies in Australia. Unlike Uber’s commission of 27% and Ola’s 15%, Didi takes only 5% from fares in order to give ‘a fairer deal to drivers’ (SMH 2018). As the market remains competitive, drivers will continue to reap the driver incentives offered by new rival ride-share companies.
There are no simple answers these problems. The starting position ought to be Uber’s acceptance of responsibility for its drivers’ wellbeing and economic livelihoods, regardless of any reform to the employment relationship. It must adopt a more nuanced stance on its partner offering beyond the language of “flexibility.” After all, Uber’s relationship with labour underpins its enterprise liability and reputation. Both remain at stake without adequate responses.
If an employment relationship and workers compensation cannot be obtained, insurance is the next best thing. A joint survey by the Transport Workers Union and Ride Share Drivers United of 1,100 rideshare drivers revealed 969 reports of harassment and/or assault alongside significant concerns with property damage from violent, drunk and drug-affected passengers. At the time of writing this article, Uber announced it would offer free accident insurance for drivers, providing a $5000 childcare benefit and an assault benefit as well as an income supplement of $1500 for bodily injury alongside up to $4500 where workers are injured or temporarily disabled (SMH 2018). While this is a step in the right direction, the practical application of this new policy must be further scrutinised.
To reduce the risk of arbitrary ratings, Uber ought to make written feedback compulsory in the event of low ratings, moderated by Uber and then provided to drivers. Uber could also introduce an option at the pick-up stage for passengers to select whether they are travelling ‘quietly’ or wish to have converse with the driver. This will limit ratings given on the basis of drivers being ‘too quiet’ or ‘too talkative.’ The drivers I spoke to mentioned that deciding how to interact with a passenger was a constant guessing game. These solutions resolve this issue and upskill Uber’s service experience at the same time.
As foreshadowed, another issue is the lack of any regulation over the sheer number of drivers on the road. While the appropriate solution in the near future might be a regulatory cap on ride-share drivers in Sydney, the alternative is to guarantee minimum wage protection for existing drivers, as implemented in New York (Quartz 2018). The latter option doesn’t require an employment relationship. Uber only need to take less commissions from its drivers. No doubt, its profit will take a hit, but measures can be taken to mitigate this by increasing the efficiency of its drivers. Uber already provides extremely general advice on popular times and ride locations through its Driver Guide. Building an option for a data-oriented driver-interface on the Uber app to include dynamic heat maps of popular areas, the saturation of other Uber drivers and expected demand based on major events or user density, will allow drivers to reach pick-up points even faster and increase trip volume.
The forgotten voices of the ride-sharing industry are those of drivers. Beyond this, Uber’s uneasy treatment of its drivers has left a bitter taste on the mouths of broader society. Whether it likes it or not, If Uber fails to address fundamental challenges in its labour model, it risks discarding the voices of consumers and the broader market too. Those are voices Uber would do well not to forget.