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Ola & Uber model indicates failure as workers struck the work

Two different strikes, separated by economic doctrines but bound together by common grievances, point to the vulnerabilities of the new class of workers in India.

The first of these, by the drivers of Ola and Uber cabs demanding the fixing of a base fare for trips along with an increase in the per kilometre fare, started simultaneously in Delhi and Mumbai but, after fizzling out in the capital, has been on in Mumbai for the last nine days.

The second was a strike by 12,000 contractual employees of the state-run Delhi Transport Corporation (DTC), demanding higher minimum wages and the implementation of pay parity between contractual and permanent employees. The DTC strike, the first in 30 years, follows a similar one in neighbouring Haryana where workers of the state roadways corporations have been off the roads for the last two weeks.

Both kinds of workers, though vastly different in their backgrounds, are underpaid, largely casual and unorganized. DTC’s contract workers represent an emerging segment which has been growing rapidly in India and now accounts for nearly 30% of the total workforce.

Gig economy drivers who work with Uber and Ola are treated as mini-entrepreneurs and so expected to share in the fortunes of the companies without enjoying any of the benefits available to permanent employees.

The DTC strike ended in a day as the state government agreed with alacrity to the workers’ demands, despite having imposed the Essential Services Maintenance Act (ESMA) earlier. It needs to be seen in the context of the Minimum Wages Act of 1948 which called for the government to review wages every five years. While the unions insist this hasn’t happened, it is also true that DTC’s staff productivity levels are among the lowest in the country and it is the biggest loss maker among state transport corporations as per the Transport Research Wing of the ministry of road transport and highways.

However, it is the strike by cab drivers who are a part of the new economy that appears more vexed. With no single union representing the strikers and no authority in place to consider and adjudicate on their demands, the driver partners as they are dubbed by the companies aren’t even sure of their rights.

Since they only get to see the destination after they have accepted an incoming ride and started the trip, very often they are forced to cancel rides because the fares are simply not remunerative enough.

Given the sharp rise in fuel prices, it isn’t surprising that their discontentment with the arrangement that they signed up to, has also been growing.

In the UK, where Uber drivers went on a 24-hour strike earlier this month, the company is contesting in a Court of Appeal the findings of an employment tribunal that drivers should be treated as workers rather than as self-employed. If it does lose the case and Uber drivers are classified as workers, they will be entitled to paid holidays and the minimum wage.

Not just for Uber, but for the whole of the gig economy, that could be a body blow. For those championing the cause of the new mobility business versus the older state-controlled model, it is useful to remember that both Ola and Uber are hugely loss making.

The Indian company lost ₹4,897 crore in FY 2016-17 while Uber lost $891 million in the second quarter of 2018. If the loss-making operations of DTC are subsidized by the state government, those of the Unicorns from the gig economy are being sustained by the largesse of private equity.

Sadly, while investors make money when the valuation of their investments goes up, there’s little in it for the drivers. In the sharing economy, there is little sharing of wealth.

The problem lies in both the business models. State transport corporations in India, given their low fares and the need to service all routes irrespective of passenger volumes, are inherently unprofitable.

The Uber model too is inherently flawed with chances of profitability seriously questioned by experts.

Poor returns for employees and drivers of both kinds are the collateral damage from these broken models.

Source:livemint