Ride-sharing services are not the answer to Dublin’s taxi problem

This article originally appeared in The Irish Times, 8^th July 2022.

In response to concerns around the availability of taxis in Dublin, Tánaiste Leo Varadkar has suggested the Government might consider introducing transport-sharing services. He specifically noted the presence of Uber and Lyft in other countries. Uber and Lyft are online platforms that connect (independent) drivers with customers and take a percentage of each fare.

While liberalising Irish regulation to allow such services to operate in Ireland might contribute to easing transport issues, the experience in other countries suggests this would likely also be accompanied by a raft of other problems – namely precarious jobs and regulatory headaches for the Government. There have been strikes/protests and employment law cases by Uber and Lyft drivers in the UK, USA, South Africa, France, Belgium, Australia, and Canada.

Drivers claim they are low paid, are not consulted by these companies on pay and conditions, they can be summarily ‘de-activated’ from the app based on algorithms, and are bogusly self-employed. The companies have been careful in how they describe drivers – usually referring to them as ‘drivers’ or ‘partners’ rather than employees. This is to reinforce their business models which have been based on treating drivers as self-employed contractors, not employees, and the companies claim this arrangement allows drivers ‘flexibility’ which, they say, could not be achieved if the drivers were employees.

This argument is flawed, and fundamentally one sided. The reality is that their business model allows them to transfer risk onto drivers who have limited employment rights and it facilitates employer, not driver, flexibility. Treating a driver as an employee does not negate flexibility. Despite the companies’ arguments, courts in several countries have concluded that Uber drivers were misclassified as self-employed and should be categorised as employees (France, the Netherlands, USA) or workers (UK). However, there are no guarantees that potential Uber/Lyft drivers would be successful were they to take such as case in Ireland, as cases involving employment status are complex.

The outcomes for workers in the US have been stark. Research has found that ride-hail drivers are only guaranteed $5.64 an hour after waiting time and expenses are taken into account. They are generally excluded from all employee type benefits. ‘Black box’ algorithms calculate pay which make it more difficult for drivers to predict or understand the basis for earnings calculations.

There is evidence of what has been termed ‘labour price discrimination’ where there are variations between the rates given to different drivers based on the information held on them by the company. In essence this is akin to differential pricing that insurance companies are alleged to use, but in this case it is used to determine pay. Anecdotal reports from drivers indicate that since the black box method was introduced, their rates are falling.  Furthermore, most drivers in the US and other countries (such as UK and France) tend to come from already disadvantaged communities of migrant workers, embedding social exclusion and precarity for these groups.

Uber and Lyft workers’ rights are not the only issues causing regulatory problems in other countries. Taxi drivers have undertaken strikes across Europe protesting against the entry and operation of Uber and Lyft, Transport for London refused to renew Uber’s licence to operate in London several times due to concerns over passenger health, safety and security, while courts in Germany and France have banned or fined Uber for breaching competition regulations. Governments have been under pressure to regulate issues of employment status, health and safety, and competition arising from the operation of transport-sharing companies.  

In response, Uber and Lyft have threatened to suspend services, exited markets or attempted to heavily influence proposed regulation. For example, Uber, Lyft and similar companies spent over $200 million successfully persuading Californian voters in 2020 to support a ballot they wrote which provides that app-based transportation and delivery drivers are classified as independent contractors.

The proposition to further liberalise the transport sector is illustrative of a Government belief in the ability of the market to solve public issues. Such beliefs are not always justified. For example, the housing shortage and rising rents are linked to failure of the private sector to build enough housing to meet demand, and the entry of Airbnb, who operate on a similar model to Uber and Lyft.

Economically, we are in unstable times. Increasing precarious jobs and damaging livelihoods may be unintended consequences of deregulation, but they are also foreseeable outcomes which Ireland invariably does not need. Ireland should be striving for more decent jobs, which as the International Labour Organisation has argued, means stronger and more inclusive economic growth.

Posted in: Corporate governance • Economics • Inequality • Labour market

Tagged with: conflictsofinterest • cooperation • corporatesocialresponsibility • discrimination • economicgrowth • economicpolicy • equality • Labour • labour standards • Progressive Economy • Transport • Uber • work

Dr Michelle O'Sullivan

Dr Michelle O'Sullivan's expertise is primarily on the quality of work and precarious work, with particular attention on public policy.

Chair of the Irish Association for Industrial Relations, Co-Chair of the Work, Employment and Organisation Special Interest Group in the Irish Academy of Management, is a member of the Board of Directors of TASC and the Scientific Council of the Foundation for European Progressive Studies. She was a Board Member of the Workplace Relations Commission from 2015-2021.