Uber is flying. On top of recording two quarters of profitability for the first time ever, the Silicon Valley company's market capitalisation went over the $120 billion mark for the first time in early December. That's three times what it was at the peak of the Covid pandemic, when demand for ridehail collapsed. The company was saved by its food delivery operation Uber Eats, which surged, and now ridehail has made a full recovery. But rising demand does not explain the turn in Uber's fortunes: driver pay cuts do.Len Sherman is not exactly a radical. The Columbia University Business School Executive used to be a senior partner at Accenture, the IT services giant. He's a management consultant. But Sherman managed to whip up a storm when he published an article in Forbes in mid-December about the root cause of Uber's new-found success. His findings were so sensational that Forbes (a magazine for American business-types) pulled the article down, presumably due to Uber's fury about its publication. It then reappeared, with a big qualifier at the beginning to make it clear that Uber in no way accepted Sherman's analysis.What Sherman found is that in Q3 2023, when Uber turned its second-ever profit, US driver pay was down a whopping 12% year-on-year. To add insult to injury, Uber's 'take rate' - the amount of money they make on each trip/delivery - was not 15% as the company claimed, but a massive 40%. An enormous increase in Uber's rate of exploitation was never announced, and has not been admitted to. In fact, if you ask Uber CEO Dara Khosrowshahi, Uber drivers have never had it better. The way this huge pay cut has been disguised is through a means we have discussed before in this newsletter: dynamic pricing, or what Uber calls 'upfront shares plus distribution' (UFD)."By decoupling driver pay from actual trip time and distance, UFD gives Uber broad discretionary control over setting trip pay to the lowest level any driver is willing to accept for ridehail trips," Sherman says, in words that are very similar to those of professor Veena Dubal, who was one of the first to blow the whistle on this practise.Sherman's analysis is based on independent research from two data analytics companies. The graph above shows Sherman's key findings: since dynamic pricing was rolled out in the US near the end of 2022, the take rate has grown rapidly, while consumer prices have stayed pretty steady and driver pay has plummeted. Sherman finds that the increase in Uber's take rate accounted for 43% of its growth in mobility revenue. In other words, those slim profits that it made in Q2 and Q3 2023 wouldn't have happened without ramping up driver exploitation. Sherman also found a juicy quote from Uber's 2019 S-1 IPO filing which shows that Uber had planned all along to increase driver pain for the company's gain:“While we aim to provide an earnings opportunity comparable to that available in retail, wholesale, or restaurant services or other similar work, we continue to experience dissatisfaction with our platform from a significant number of drivers," Uber stated. "In particular, as we aim to reduce Driver incentives to improve our financial performance, we expect Driver dissatisfaction will generally increase.”
The Columbia University executive has now followed up his first piece with a second one, which focuses on the pain US Uber drivers are suffering from this algorithmically-managed exploitation, especially at a time when driver costs (fuel, insurance, car purchase) are going through the roof. He finds that in Seattle, where Uber unsuccessfully opposed the introduction of minimum pay rates for ridehail drivers, average pay-per-minute has increased an incredible 252%, while pay-per-mile has risen 40%. Uber's argument that regulation will only hurt drivers has been thoroughly disproven. Of course, Sherman's research is only on the US, but we know that the roll-out of dynamic pricing in cities like London has led to driver protests. A lack of transparency and lower average pay in Uber Eats' new French payment system was the trigger for a national strike in December. This is a systematic global policy of the company to achieve profitability on the backs of their drivers and riders. And Khosrowshahi has a special motivation to ensure Uber's pay rates stay low or go even lower, at least for the next couple of months. Sherman finds that the Uber CEO is in line for a bonus worth "upwards of $50 million" if he can keep the company's market capitalisation above €120 billion for 90 consecutive days. The catch is that there is a time-limit on this tasty incentive: if he doesn't achieve it by September, the bonus expires. Khosrowshahi is personally invested in bad working conditions and low pay for those who do all the actual labour for his company. Wouldn't it be a shame if something were to scare investors into thinking that Uber drivers and riders might not be in penury forever, like for example a rash of powerful strikes by riders and drivers across the world? Or maybe a strong presumption of employment in the EU Platform Work Directive? Although, with the way things are going in Brussels, the EU appears more likely to do Dara a big favour... Ben Wray, Gig Economy Project co-ordinator
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Gig Economy news round-up |
- EUROPEAN TRADE UNION CONFEDERATION SAY BELGIAN PLATFORM WORK TEXT "WORSE THAN THE STATUS QUO": A revised Platform Work Directive text has been slammed by the European Trade Union Confederation as "worse than the status quo". The new text has not been made public but it has been reportedly shared at a meeting of member-state technical experts on Tuesday [16 January] and amounts to a significant watering-down of the agreement negotiated between the Spanish Presidency and the European Parliament in December. In an open letter to Pierre-Yves Dermagne, Belgian Deputy Prime Minister and Minister of the Economy and Employment in the Socialist Party, Ludovic Voet, ETUC Confederal Secretary, writes that the new text "falls short of protecting workers, does not stop exploitative bogus self-employment, and does not set a level playing field for companies in the platform economy." Voet described opt-outs for platforms which have agreed collective agreements in the new text as "unacceptable", while stating that the omission of implementation measures included in the Spanish negotiated text, whereby competent authorities assisted workers' with pursuing a case of false self-employment and investigated the whole workplace if one worker was found to be an employee, mean that the two out of five criteria for triggering the presumption of employment would be "worse than the status quo and will prove ineffective in combating bogus self-employment". Opposition to the new text has also come from Dennis Radtke MEP, a member of the European People's Party who sits on the committee on Employment and Social Affairs. Radtke, who has consistently supported a strong presumption of employment despite the opposition of some of his EPP colleagues, was reported in Table.Media as stating that the new proposal is "not capable of approval" because the exception for collective agreements "would open the door to yellow unions". He added that it would be a "slap in the face for platform workers" if "everyone doesn't finally wake up", as the risk grows of no deal being reached before the end of the parliamentary term. Read more here.
- JUST EAT TO END THE LAST OF ITS 'SCOOBER' EMPLOYEE MODEL IN FRANCE: Just Eat, Europe's largest food delivery platform, is liquidating its 'Scoober' division in France where riders are employed, with the loss of 117 jobs, mainly riders. Just Eat France already significantly reduced the number of its riders who were employees last year, having directly hired under 1,000 from February 2021 onwards, the year CEO Jitse Groen announced the company was transitioning to an employee model. The initial plan was to hire 4,500 directly. The shutting down of the Scoober division, which will be complete by September, follows the decision to do the same in the UK in 2023, when 1,700 workers were laid-off. The company said it would still be possible to order from Just Eat in France through its "partners", adding that they would seek opportunities for re-hiring "when possible". Just Eat CEO Jitse Groen claims he is still committed to the employee model and backed the Spanish-negotiated agreement on the EU Platform Work Directive in December, but claimed that the reality of competing against food delivery platforms which were saving costs from not hiring employees forced the company's hand. Just Eat announced losses of over €1 billion in March 2023 and Matthieu Saintoul, of the FO Paris union, said management "spoke of a difficult context" when announcing the redundancies at a meeting on Thursday [18 January]. The FO union will hold another meeting with the company next week to negotiate redundancy packages. Read more here.
- FIRST FINES FOR GLOVO IN SPAIN FOR BREACH OF THE RIDER LAW: The Spanish Labour Inspectorate has issued its first fines to Glovo, the country's largest food delivery platform, for falling foul of the Rider Law, which established a general presumption of employment in the food delivery sector. Glovo had already been issued fines totalling almost €300 million in relation to bogus self-employment, but these were based on investigations derived before the Rider Law came into force in August 2021. The Spanish Supreme Court had already found in 2020 that Glovo's riders were employees. With the introduction of the Rider Law, Glovo announced that it would continue to hire at least 80% of its riders as freelancers, but tweaked its model by introducing a substitution clause and making other changes with the aim of greater flexibility for the rider. The company has claimed that as a result of those changes they are compliant with the Rider Law, but the Labour Inspectorate's latest investigation of 49 riders in the Asturias region has found otherwise. TV3 reports that two 'macro-inspections' in Madrid and Barcelona will see at least another €90 million added to Glovo's fines, taking the total over the €300 million mark. Glovo's parent company, German multi-national Delivery Hero, has reserved up to €400 million to pay Glovo fines, a company it purchased for little more than double that figure. Glovo told 'El Diario' that it continues to "defend the legality" of its model. Read more here.
- SON OF SOMALI HEAD OF STATE GETS OFF WITH A FINE DESPITE ISTANBUL RIDER DEATH: Mohammed Hassan Sheikh Mohamud, a son of Somali President Hassan Sheikh Mohamud, had his sentence changed from two-and-a-half years in jail to a $900 fine for the death of a food delivery courier in a traffic accident. Yunus Emre Gocer was hit on an Istanbul highway on 30 November and died from his injuries on 5 December. CCTV video footage showed a car smashing into him from behind. Mohamud, who was driving the car, left the country before an arrest warrant and travel ban could be issued. After returning to Turkey on 12 January to issue a statement, his arrest warrant and travel ban were subsequently revoked. The judge found that Mohamud was responsible for the accident and issued a 3-year prison sentence, which was later reduced to two and a half years, before on Tuesday [16 January] it was reduced further to just a $900 fine due to his good “behaviour” and “remorse”, according to the court. Gocer's lawyers will appeal against the sentence. The small fine has angered riders, with Mesut Ceki, head of Kurye Haklari, a courier rights group, telling Al Jazeera: “Frankly, as motor couriers, we think this is not a punishment. What Turkey and the world witnessed through camera footage is a murder disguised as an accident. I am also a courier. If I die and if the person who is 75 percent responsible for my death will not spend even one day in prison, if he will walk around freely in exchange for money that will not even cost him a snack due to his position, it is not just me who dies, it is justice and humanity that die.” Read more here.
- POLICE SAY ITS INVESTIGATING AFTER RIDER HIT BY POLICE CAR IN LONDON: The Metropolitan Police said it was investigating after a rider was hit by a police car in East London on Wednesday [17 January]. The rider was treated for injuries by paramedics at the scene of the incident and taken to a major trauma-centre, although his injuries are not deemed life-threatening. Lotta Powell tweeted a picture of the incident and said: "I just walked past this scene on Bethnal Green Road - witnesses said the police car, driving the wrong way up the road, hit a delivery rider. Police were trying to prevent anyone taking pictures. I was told they were aggressive with bystanders who had seen it happen." One bystander, Meriame, told the Standard: "On the way home and approach police taping off the road. A rider has been hit by an oncoming police car driving in the opposite direction." Another said: "I was passing around 11pm and the victim looked in a really bad way." The Met police stated: "Enquiries into the circumstances of the collision are on-going. The Directorate of Professional Standards has been informed." Responding to the news, Alex Marshall, President of the IWGB union which organises couriers, said: "The Met Police need to provide an update on what happened here and should compensate this worker for not only the equipment lost in the accident, but every penny lost while not being able to work." Read more here.
Have we missed something important? You can help keep us informed by sending information to GEP@BraveNewEurope.com. |
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The liberal-populist right wing killed the EU's platform directiveNikolaj Villumsen MEP, Per Clausen and Rasmus Hjorth argue in 'Altinget' that "the EU's liberal-populist right wing in the form of one bourgeois government after another" mean that the EU Platform Work Directive will not deliver on its initial promise (in Danish).
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The European Trade Union Institute (ETUI) will host a conference on Future of work: rethinking workers' rights in the digital age, 21-22 February, in Brussels, Belgium. Click here for full details and to register (limited places available).
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