Readers of this blog will know that I like corporate Uber almost as much as I like corporate Facebook.
Both, I fear, are scams.
Facebook charges people for ‘ads’ based on the insistence that their ads will reach millions of eyes but with ‘Russiagate’ the truth won out; the eyes often numbered thousands, not millions.
And Uber? As you will read below, Urber is only marginally a ‘taxi’ service. They are in fact in the business of selling and most importantly, financing, cars.
In India as elsewhere new would-be drivers are soon trapped in a horrible downward spiral, a world where they are offered enough fares to seemingly warrant a new auto, financed by Uber, only to discover some months or weeks later that they are being offered fewer and fewer rides.
No rides, no money to pay for their Uber-financed cars, cars often repossessed by… Uber?
04 December 2018 | Amrit Dhillon | The Guardian
Moham Kumar wolfs down a few spoonfuls of spiced black chickpeas for lunch between passengers.
It is 3pm. Kumar has been on the roads of the Indian capital since 9am without a break. He will continue driving until 9pm or 10pm. This is his routine, seven days a week. “When I get home my daughter is asleep. My life is spent in this car,” he says.
Kumar is an Uber driver in New Delhi. But the dream he and thousands of other drivers were sold by the company has turned sour.
The past few weeks have seen Uber drivers – and those who drive for Ola, the domestic cab aggregator company – on the streets protesting about their conditions, calling their work “slavery”, and demanding that the government intervene.
Uber entered the Indian market in 2013. Kumar was one of many poor, semi-literate Indians who left their jobs to join up, taking out a loan for a car, and expecting to significantly increase their earning potential. “They gave us the impression that the sky was the limit in terms of money. They said what we earned all depended on us. I was told by an Uber agent that some drivers were earning up to 90,000 rupees [£1,015] a month,” says Kumar.
He became a “driver-partner”, in Uber parlance, in early 2016. By working about 10 hours a day, he was able to manage his monthly instalment on the car loan, the cost of fuel and maintenance, and enjoy savings of around 50,000 rupees – an astronomical sum for any Indian driver. “For the first time in my life, I could put some money away,” he says.
The crash, when it came at the end of 2016, was brutal. “Uber reduced the rate per km charged to passengers from 10 rupees [11p] to just six rupees. We used to get an incentive of 2,000 rupees every day once we had completed a dozen rides. This was cut back to just once a week for doing 40-50 rides. And they hiked their commission from 20% to 25%,” says New Delhi Uber driver Naresh Kumar (no relation).
Certainly, my ride is cheap. The 5km journey in an air-conditioned WagonR costs me 90 rupees – around the same as a hot, windy, uncomfortable ride in an auto-rickshaw. Indian passengers are thrilled with the low fares.
But these rates – along with the other measures – are a disaster for drivers. They cannot reduce the size of their monthly car repayments. Those who want to sell the car and get out cannot do so as the resale value won’t be enough to repay the loan. And while the ride rates have fallen, the price of petrol and diesel have gone up.
“They are locked into a form of bondage,” says Gautam Mody, secretary of the New Trade Union Initiative, a relatively new national organisation. While many drivers angrily accuse Uber of making false promises, even “guarantees” about income, Mody concedes it is probably unlikely that the San Francisco-based company promised specific numbers in its advertising. What isn’t known is how its agents projected the work.
And the fundamental point, in any case, says Mody, is that Indian drivers with barely an education but a strong desire to support their families are vulnerable when anyone promises them a better life. “The fact is that Uber created a perception that spread by word of mouth. I know not just of drivers who left OK jobs, but of office employees – lower level accountants and bank clerks – who left their jobs to earn better money as Uber drivers,” says Mody.
Sunil Borkar, head of a Mumbai union that represents Uber drivers, says drivers had been lured into working for the company with big promises and then left high and dry after Uber changed the terms. “Now they are saddled with car loans they can’t pay off. Some are desperate – breaking their backs and just breaking even, if that. There is no exit for them,” says Borkar.
Borkar says that Uber and Ola officials have refused to meet union representatives. He wants the Mumbai authorities and those in other states to force the two companies to increase the fares by between 25% and 50%.
When Ramesh Sethi recently visited an Uber office outside Delhi, pretending to be interested in joining, he was given the hard sell.
“They told me I could earn big sums, that I could save as much as 40,000-60,000 rupees a month after expenses if I worked hard. They said it all depended on the hours I was prepared to put in,” says Sethi. They also held out a bait: join right now by paying a 2,000 rupee fee and we will give you a 5,000 rupee lump sum the moment you start.
Borkar says the chief minister of Maharashtra, where Mumbai is located, has agreed to meet him soon to try to resolve the problem.
But Mody says ad hoc meetings in one state or the other are not the answer. “The crux of it is that it’s a lawless industry. It needs to be regulated to protect both passengers and drivers,” he sau.
An Uber spokesman said: “Over the past two years, as the popularity of our service has increased, we have moved from a startup mode to a more sustainable business model and started to reduce higher levels of incentives while investing more in drivers and our products for the long term. Hence, while driver incentives across India have tapered from the 2016 levels, earnings have largely remained sustainable and consistent over the past several months.
“We keep experimenting with our incentive structures, which may differ from city to city and can vary between one driver partner to another, based on the kind of incentive structures they opt for. That said, we are focused on ensuring that offering trips through the Uber App remain attractive. Driver earnings across India have largely remained sustainable and consistent over the last year.”
The spokesman acknowledged that recent fuel price increases have impacted earnings, and said the company had introduced a mechanism to ensure driver earnings across India correlate with changes in the price of fuel. The mechanism has been rolled out in Mumbai.
He added that Uber is also “working towards providing driver partners access to health insurance, life insurance and micro loans and a host of other benefits aimed at improving their welfare”.
• This article was amended on 6 December 2018 to clarify where Uber driver Moham Kumar works.