A few months ago, after the U.S. presidential election, I wrote about how Uber and other gig-economy companies achieved big legal success in California. During the presidential election, other referendum options are also on the ballot in each state. California held a referendum on a yes / no vote on Proposition 22 in the 2020 election. This is especially important for companies such as Uber, Lift, Door Dash and GrabHub. These businesses, which employ ‘ordinary’ workers, have threatened to leave the state if they do not vote. They wanted to classify their drivers and food distributors as contractors, not employees.
They have become a part of our daily lives and are worth tens of millions of dollars in the private equity world and in public markets, but gig-economy companies operate on risky business models. For example, delivery companies such as Ride Hailing or Uber and Lift often lose money on every delivery made and every ride given. Uber’s loss before interest and tax in the third quarter of 2020 was 25 625 million. In fiscal year 2020, its net loss was 8 6.8 billion. It is said to be the cause of the epidemic. Such organizations have given signals that they could become profitable as the administration of Kovid-19 vaccines helps reopen economies around the world.
But to run a profitable business a company needs a company to attract new revenue, because the epidemic can be reduced and its costs can be reduced. The classification of employees has led to the number of labor rights that today’s gig-workers do not enjoy as ‘independent contractors’. It would therefore increase costs for gig-economy firms, which in the wake of the epidemic-induced decline in revenue would receive a jolt of their expectations of turning a corner into profitability.
Workers on gig-companies in California do not have the same rights as sick days, overtime pay, unemployment insurance or other employees working under occupational safety and health laws. The Assembly of California has previously sought to overcome this with a law known as Assembly Bill 5 (AB5), which guarantees these rights. According to the Los Angeles Times, a lawmaker who wrote AB5 and opposed Proposition 22 said: “Instead of paying their drivers, gig-corporations launched a fraudulent $ 204 million campaign to change the rules for themselves and pay their workers less or less. Our state laws are necessary. “
After spending over $ 200 million in California, Uber and other gig-companies, through slick marketing, have been able to convince left-wing voters in the state that they are going to pay well for their drivers and delivery agents. According to the National Employment Law Project (NELP), driving an average of 35 kilometers per hour during a 40-hour work week would be reduced to 7,287 per week after Approval 22 is approved. This is in addition to health care and other deductions. “A permanent underclass of workers has been created,” NELP said.
At the time, I hope gig-businesses will be heartbroken by the California success and reflect this success across and outside the US. Uber has faced its share of legal troubles outside the US. It conceded defeat in China and sold it to Didi Chuxing, the biggest competitor there. It is also encountered in Europe and the UK. In France, Uber lost a decision in the country’s Supreme Court last year, meaning its drivers have the right to be treated as employees. In other parts of Europe, such as Germany, Italy and Spain, Uber’s labor practices have increased the hackles of local taxi unions, which have so far been able to persuade lawmakers to limit its availability.
It is a much greater attempt to deceive voters into making a favorable choice than to persuade Supreme Court judges. On Friday, February 19, the Mint reported (bit.ly/2ZCnDUD) that Uber, one of its most important markets in Britain, had suffered a major setback when the country’s Supreme Court ruled that a group of drivers should be classified as minimum qualified workers. British Supreme Court judges have unanimously ruled that Uber behaved like an employer by setting rates, assigning rides, requiring drivers to follow certain routes and using the rating system to discipline them, but said it was only a technical platform to connect drivers with passengers. . Currently, the decision is limited to the 25 drivers who actually brought the case. The ruling will be relayed to the Employment Tribunal to find out how it affects all Uber drivers in the UK.
Surprisingly, Uber overturns the court’s decision, saying it would force the employment tribunal to limit the scope of the ruling. However, anyone with basic logic can see how this is declining for 60,000-plus Uber drivers in Britain and resonate beyond that country’s borders. Uber also extends its influence to other gig-economy companies that rely heavily on ordinary workers.
In India, we are somewhat isolated from such issues. The ‘informal economy’ includes licensed fair attitudes in our attitude towards workers. It is surprising to see food delivery agents and ride-healing drivers trying to see some social security benefits under the revised Labor Code. Gig-owners in India do not know how to oppose this.
Siddhartha is the founder of Siana Capital, a venture fund management company focused on deep science and tech in India.