Low base fare and stiff targets bust the dream of Ola, Uber drivers
Unlike in India, where a Delhi high court order described the relationship between drivers and companies as ‘purely contractual’, which limits benefits to them, courts in the US and UK have sided with drivers, ruling that Uber must consider them as company employees and not an independent contractor.india Updated: Nov 15, 2017 11:35 IST
Rabin Mandal is planning to pull out his daughters – Nikita and Ankita – from a missionary school in south Delhi and enrol them in another institute with lower monthly fees.
An Uber driver, Mandal has seen his earnings dip sharply over the past one year, forcing a drastic change in the family’s lifestyle. His wife, Malati, says they have cut down on non-vegetarian food and don’t buy fruits “as much as we used to”.
The story of Mandal – who arrived in Delhi from Bihar’s Madhubani in 1992 – is symbolic of a dream gone bust for thousands of people in India who joined a transport revolution introduced by cab aggregators, Uber and its rival Ola.
In a country where taxi meant the ubiquitous Ambassador cars – fondly called the ‘kaali-peeli’ for their yellow and black colours — cab aggregators changed the way people travelled, especially those with smartphones.
People like Mandal benefitted from the ‘gig’ or shared economy model in which the earnings are shared by the company and the ‘partners’, the term used by Ola and Uber for their drivers.
When hopes took shape
According to economist Santosh Mehrotra, this was a big diversion for existing workers in an unorganised private sector. Overnight, the drivers became ‘freelancers’ who now had control over their lives. Or so it seemed.
Mandal started off with a Mahindra Xylo, which he had purchased on loan.
And the early days were good enough to give him handsome returns, mainly due to the incentives offered to drivers by the company.
For instance, the drivers would get about Rs 1,100 to Rs 1,400 on completion of a particular number of rides in peak traffic hours. This concept was new to the drivers, with many coming from jobs where overtime work without compensation was common. The drivers worked longer hours to achieve the targets.
The increase in income also reflected in the lifestyle of many drivers.
Mandal bought two Hyundai Accent cars in consecutive years on loans and enrolled both with Uber. He also hired two drivers, who worked during the day while he drove at night.
Ranveer Singh, 28, from Nangloi in Delhi, shifted his daughter to a private school as his income increased with Uber.
Then came the shock as the cab aggregators cut base fares and incentives and gave stiffer targets, which often meant spending 14 to 16 hours on the roads for the drivers.
“Earlier, my income was quite satisfactory. Now with both the cabs, I’m not able to earn as much as I used to earn with a single cab,” says Mandal.
For Singh, the fall in earnings means he is not even able to pay the school fees of his daughter.
Income takes a nosedive
Close to 30 drivers HT spoke to said their monthly income in the past one year has dropped roughly by 40-50%
In May, the State Bank of India (SBI) suspended car loans for Uber and Ola cabs and seized close to 300 cars for defaults.
Earlier this year, Uber and Ola drivers staged multiple strikes in Mumbai, Delhi and Bengaluru demanding reinstatement of the original incentives and base fares. Uber India president, Amit Jain, however, wrote in a blog post that the protests were organised by a few individuals who do not represent the majority of the driver community.
An Uber spokesperson attributed the drop in incentive to a shift from the “startup mode to a more sustainable business model” in which the company could invest more in drivers and their products for the long term.
online booking value in 2016, according to Indian Consumer Internet Industry Review 2016 by RedSeer Consulting30%
of cab market has moved online in large cities13.5 lakh
Uber and Ola combined vehicles in India
◼ The past one year has seen a cut in base fares and incentives offered to the drivers
◼ According to the 30 drives HT spoke to, their monthly income in the past one year has dropped roughly by 40-50%
Lives at risk
Drivers say their problems don’t end at decreased earnings.
Earlier this year, an Uber driver, Nazarul Islam, lost his life after a BMW car crashed into his vehicle in Delhi. His wife, Arjena Bibi, says they did not receive any financial help from the company.
Uber rolled out an insurance program for drivers from September 1 to provide “free coverage for accidental death and disablement, hospitalisation, and outpatient medical treatment in case of an accident”.
Ola did not respond to a question on insurance, but said it has an in-house pharmacy and provides regular medical check-ups for drivers and their families.
Development economist and JNU professor Jayati Ghosh is critical of the business model.
“Contemporary capitalism is moving to conditions in which employers can essentially absolve themselves from any kind of responsibility towards workers, whether in the matter of working conditions, pay, or other social protection.”
In April, the Delhi high court put a permanent restriction on two taxi drivers’ unions from disrupting the services offered by Ola and Uber, describing the relationship between drivers and companies as purely contractual.
While the HC provided relief to the aggregators, courts in the US and UK have sided with drivers.
In a 2015 judgment against Uber, the California Labour Commission ruled that the complainant driver has to be considered an employee of the company and not an independent contractor. Also, in late 2016, a UK employment court ruled that Uber drivers should be considered company employees and given the “national living wage”.
But till such time this happens in India, people like Mandal say they have no other option.
“Ab yahi karna padega. Aur kuchch toh karne ka soch bhi nahi sakte. Gaadi ki kisht kaise utaarenge (This is what we will have to do now. We cannot even think of doing anything else. How will I pay for the instalments of the cars?),” he says.