Monthly Archives: July 2015

Myth busting: worker rights should not mean an end to flexible working for Uber drivers

This week the GMB announced it would take Uber to UK employment Tribunal to protect worker rights currently denied by Uber to it’s drivers. But if successful there really need be no change in current working practices for drivers. All that needs to change is that Uber must ensure drivers:

  • earn at least minimum wage
  • have safety protections to ensure no excessive hours and adequate rest breaks
  • have protection from discrimination
  • do not suffer unfair deductions from income
  • have paid holiday

The standard of workers rights contested in the claim are so minimal one wonders what all the fuss is. Surely, a decent company like Uber with backing from the likes of Goldman Sachs would not want to deny this to anyone?

Rather than address the issue at hand, Uber’s PR crew spread fear about an apocalyptic end to life for drivers as we know it.  Commenting in the FT Uber UK said:

One of the main reasons drivers use Uber is because they love being their own boss. As employees, drivers would drive set shifts, earn a fixed hourly wage, and lose the ability to drive elsewhere as well as the personal flexibility they most value.

Of course this is a complete red herring. There is nothing about this legal challenge that requires Uber to prohibit drivers from continuing to work flexibly. There is nothing in the law that would require Uber to have drivers work set shifts, earn a fixed wage and drive exclusively for Uber. Nothing.

In fact, Nigel McKay of Leigh Day, GMB’s instructed lawyers for this case said also in the FT:

You can have workers engaged flexibly, but they are workers, and they’re still entitled to basic rights.

We know Uber must have declared war because their first casualty appears to be the truth.

Myth busting: GMB does not want to shut down Uber

Over the past few days I have heard some mischievous communications suggesting that, in bringing a worker rights claim against Uber, GMB’s real agenda is to close down Uber. Nothing could be further from the truth.

It is true that GMB recently asked the regulator to revoke Uber’s license in order to bring the app company rapidly into compliance. It was critical that Uber meet TfL requirements to maintains proper control of records to ensure that all cars dispatched have correct insurance cover. This came about after a group of worried employees raised concerns over short comings in its document management processes. The process failure was dramatically exposed by the Guardian in an undercover operation.

Now the august Management Today vexatiously conflated the recent worker rights claim and the earlier call for license revocation.

Those who believe the GMB is mainly concerned about the livelihood of Uber’s drivers may be puzzled to discover that just six weeks ago the union was calling for the startup’s taxi licence in London to be revoked over claims its vetting process was inadequate. Valid concern or not, it’s unlikely that Uber’s drivers would be too pleased if the company generating their income was no longer allowed to operate.

But one and one don’t make three. In all cases the GMB was acting in the greater public interest and in the interests of its members who drive for Uber.

How do we know?

  •  Because it was drivers that approached GMB with some serious ethical concerns about deficiencies in Uber’s operational procedures relating to document checks.
  • Rather than ignore the matter GMB attempted to engage Uber to no avail. GMB called on TfL to act.
  • It’s entirely appropriate for a regulator to suspend an entity it supervises when it falls below compliance UNTIL it reaches the required standard.
  • That is what GMB called for in this case as the safety and welfare of drivers, riders and the public was at stake.
  • TfL have examined this case and say Uber is now in compliance.

Whether on land, sea or air, safety in transport operations must always come first and I’m glad GMB didn’t look the other way and say ‘not my job Gov, never mind the travelling public’.

Similarly, it is drivers that proposed to GMB that Uber denies them their rights as workers under UK law and GMB agreed to back the case. Again, it is in the public and the driver’s interest that Uber obeys the law on this. I believe an enlightened Uber too will come to see that obeying the law and operating to a high ethical standard is in its own long term better interests,

In the meantime Management Today can spread the FUD but the law will still be the law.

David Lammy is not afraid of Uber. Wise or naive?

David LammyIn a week when a showdown between Uber and the Mayor of New York comes to a head, David Lammy, prospective candidate for Mayor of London for the Labour party, is talking tough. It maybe a fight he’ll come to regret picking if senior New York City Democrats are right. Speaking about Mayor DeBlasio’s bid to cap the number of  private hire licenses issued, a policy Lammy has committed to adopting for London if he is elected,  a senior New York City Democrat said:

The de Blasio folks think this is going to end on Tuesday, but Uber is just going to chip away at his poll numbers. ……. for Uber this is existential — they just have to kick the shit out him forever as an example to other mayors.

And Uber is turning up the heat, just look at the screenshots below when you try to book an Uber in New York City using the ‘DeBlasio’ option. Make no mistake, if Lammy or any other Mayor tries to cap private hire licenses in London they can expect similar treatment.

Uber deblasio 1 Uber Deblasio 2

At a recent meeting with private hire drivers in London, David Lammy set out his policy stall:

  • Private hire licenses need to be capped and reduced if for no other reason than the flood of new licensees on London’s streets are materially contributing to pollution and congestion.
  • Rejects Uber’s creepy devotion to Ayn Rand and her inspired approach to market fundamentalism: ‘it’s not just about the market’.
  • Unlike Boris, he would have not granted Uber a private hire operator’s license in London on the grounds that it operates a virtual meter which is only allowed for taxi licensees. Rejecting Boris’ logic he would have been happy to see the issue go for judicial review.
  • His ‘bottom line’ on his list of Uber related grievances: ‘they don’t pay any tax in the UK.’
  • As a self described community organiser of the Obama mold (they studied together at Harvard) he expressed surprise at how muted the response to Uber has been in London compared to the level of popular opposition in Paris.

On other transport issues:

  • He supports expansion of Heathrow and rejects the ‘Boris island’ plan as something that was never going to happen. He was quick to point out that competitor Sadiq Khan rejects am expansion of Heathrow.  He recognises the potential for community disruption but points out that, unlike China, the UK has a fair compulsory purchase process.
  • He does not oppose a city wide 20 mph limit.
  • He is generally supportive of expansion of sensible cycling lane arrangements

His main campaign theme will be the urgent need for housing construction in the capital and sees a bite into the green belt as inevitable. He does not believe that brownfield, dense, high rise construction in inner city areas can adequately address the capital’s housing crisis.

He was especially scathing of campaign front runner Tessa Jowell. At 68 he feels she is not a strong candidate demonstrating a certain ageist attitude matched also by Patricia Hodge who said that Labour should skip a generation in it’s mayoral candidate selection.  It could be a live issue when compared with the relatively youthful Zac Goldsmith, the Conservative front runner.

Lammy was especially scathing in his assessment of Jowell’s damaged credibility due to her marriage to David Mills – a one time advisor to Silvio Berlusconi. Mills, a corporate lawyer, was involved in setting up off shore entities for Berlusconi for the purposes of tax evasion. Later he was convicted of accepting a bribe from Berlusconi to provide false evidence in the former PM’s trial. Mills was sentenced to four years in jail which was eventually successfully appealed on a technical point – an expiry of the statute of limitations. Lammy believes all of this is fair grist in an election campaign and would be Jowell’s undoing.

He also attacked Jowell over her role as Secretary of State for Culture, Media and Sport bringing forward the Gambling Act of 2005 which gave rise to the proliferation of high street gambling shops with highly addictive fixed odds betting terminals.  Lammy, has a certain old world puritanical streak to him (he defends the right of parents to carry out corporal punishment of their children) but he certainly saw first hand the social blight arising from gambling in his constituency of Tottenham. At the time Jowell dismissed opponents to the gambling  bill as ‘snobs‘.

Make no mistake – the fight for the Mayor’s office will be lively and robust. But this could be as nothing to the fight any future Mayor will face with Uber should they attempt to rein in it’s reach to the London market.

Robert Reich says Uber is a bad actor that should be put out of business. Fair?

Robert Reich, former Secretary of Labor under President Clinton is something of an honorary Brit through marriage. I know this because I had the honour to drive him from Heathrow into town, back again and to hear him speak some years ago. He is also a conservationist and as such unwittingly confused his kids at bath time. I heard him tell the story of how when be bathed his kids it was in 2 inches of water which he referred to in his American accent as a ‘baaaaaaath’. How wife, a Brit, on the other hand filled the bath right up and referred to it in her English accent as a ‘bauwwwwth’. The kids grew up thinking a shallow bath was a ‘baaaath’ and a deep bath was a ‘bauwwwwth’. He is a truly funny speaker and I highly recommend his book ‘Locked in the Cabinet‘ for an hilarious behind the sense account of life in the Clinton cabinet.

Reich is also a fearless advocate for social justice and inequality. He attributes this to the murder of his friend by the Ku Klux Klan which inspired him to always stand up to bullies. And this he did memorably in office taking on an intractable Bridgestone over it’s terrible safety record.

Lately he has been writing a lot about the declining welfare of workers in the contract working, sharing economy. In particular he has been particularly harsh in his commentary on Uber calling ‘a bad actor that should be put out of business.’ See his July 1, 2015 post on FB here.

He notes:

Meanwhile, Uber controls all other aspects of their drivers’ employment but refuses to treat them as “employees” so it doesn’t have to pay minimum wage, Obamacare health insurance, unemployment insurance, worker’s compensation, or unemployment insurance.

This is a key test for employment or worker status it seems — do we as drivers control our work or are we more so controlled by Uber? Obviously it’s not a binary one or the other answer but a question of where the balance of power lies.

But he also raises the question of anti competitive behaviour in the form of predatory pricing.

Under antitrust law, a company acts illegally if it engages in predatory pricing – pricing below cost in order to push competitors out of business.

Now this is an altogether more tricky question. Uber claims it is merely the market maker so who, if anyone, is acting anti competitively? Is it us driver/operators who are working at these prices? Are we offering prices below cost by taking all commission and operating costs while undervaluing our labour to the point where we accept less than the living wage?

Or perhaps we are all simply good faith actors in a free enterprise economy allowing the market to clear at equilibrium with happy buyers, sellers and intermediaries.

I wonder what you think.

Did Uber price gouge during the London tube strike?

Wednesday night and all day Thursday was crazy for us London Uber drivers and even more so for commuters. Tube strikes on one line or another are fairly frequent but this is the first time I’ve seen the whole system be taken down in a strike. The price up lift of 2.9x was a welcome boost to earnings but the gridlock in London made it difficult to turn over the work at pace. One journey from Picadilly to Old Street took nearly 90 minutes and cost my poor passenger £50. Ouch!

Admittedly, most passengers took the surge pricing in their stride and mostly seemed philosophical about it. Maybe the ones who were truly indignant refused to book and those who couldn’t afford it walked home. Spare a thought for London’s key workers on modest wages forced to live far out in the suburbs due to high housing costs.

As I sat in the traffic I had time to think about the system. Was I instrumental in providing an essential service efficiently rationed to the highest bidder according to economic laws? Or was I part of an opportunistic scam to unethically price gouge Londoners in their hour of greatest need?

The Telegraph was perhaps alone in making the case in the media that Uber was right to triple its fares during London’s tube strike. The reader poll with the article shows 75% of readers agreed with the proposition. The article drew on a poll of so called influential American economists who wholeheartedly agreed with the proposition using surge pricing to allocate transportation services – such as Uber does with its cars – raised consumer welfare through various channels, such as increasing the supply of those services, allocating them to people who desire them the most, and reducing search and queuing costs.

But the economists did have some important caveats to their opinions. One pointed out that consumer welfare and market efficiency are not the same thing. Another agreed with the proviso that there are no major externalities. (Many might argue that the strike and associated grid lock was indeed a major externality.) Another agreed provided there was true competition in the market place. Uber’s UK MD, Jo Bertram, provided an interesting analysis of competitor performance during the strike relative to Uber’s.  Yet another economist ceded the point but pointed out that efficiency was just one outcome and anti gouging laws protected people from market efficiencies that have anti social effects. For me, the real insight came from one economist who agreed with the proposition provided the surge really did incentify additional supply into the market otherwise it would be a straight transfer to Uber.

In comparison, The Telegraph’s argument is facile. Peter Spence argues that 2.9x prices helps Uber to manage digital queues that would become over whelmed by rampant demand. I could see this might be the case if a local minicab office despatcher suddenly had to take 50,000 calls but Uber’s e-hailing system is completely automated and designed to work at huge scale. On the other hand Spence and Jo Bertram argue that surge prices brings more capacity into the market. In fact Uber claims there were twice as many drivers on the road in London on Thursday morning than normal.

But is the surge a force for perfect market efficiency? In the wake of a major snow storm in New York that saw Uber surge to 8.25x the New York Times hit the nail on the head.

But there is no way for customers to gauge supply and demand for themselves beyond looking at the dynamic-pricing multiple. And dynamic pricing is still not the same thing as true market pricing — like an auction system in which riders and drivers bid for one another’s services. Its opacity goes a long way to explaining the frustration it has generated

Back to the original question – it may or not be fair but is it gouging? According to wikipedia, most US anti gouging laws contain a three part test:

  • is there a public emergency?
  • is it a necessary good or service?
  • has the pricing exceeded legally set ceilings?

To answer the question one has to ask if the strike created a public emergency in the transportation system, if transportation should be deemed an essential service and if there are price ceilings or norms beyond which Uber prices should not be allowed to escalate. certainly its something that Transport for London and the Mayor of London should be considering closely.

Personally, I’d much prefer a higher average fare than fluctuating, dymanic prices. The base rate is too low for the market as is clearly evidenced in Jo Bertram’s article. Surge pricing does lead to customer dissatisfaction – I know because my driver ratings fall during surge periods. But the opacity of the system is a real problem. I’m not convinced the process isn’t being gamed cleverly. During this week I’ve noticed periods of no availability at Wimbledon and yet prices stayed static. At other times, I’ve seen surges come and go in waves that would have meant it unfeasible for meaningful movement of supply. London’s airports seem always to be exempt from surge prices for some reason. Like many others when I know the surge is coming and going I will just log out and wait for the surge to come back which it inevitably does. Consumers are doing the same dance from their side. Is it market efficient welfare inducing beahviour. I’m not so sure.