Monday, July 10, 2017

Potential Implications Of The Taylor Report, Appears To Be Bad News For Uber Drivers

This evening The Telegraph published a reporton what they say will be in the Taylor report on Modern Employment Practices due out on Tuesday. The report, commissioned by Theresa May, will advise the government on changes believed necessary to employment law.

A few points in The Telegraph piece immediately jump out:

Mr Taylor will also call for companies to harness their technology to tell workers how much they are likely to earn before they log on to work.

Mr Taylor will stress that companies will not be obliged to pay workers a minimum wage if they “knowingly” work when demand is low or those who complete tasks at a slower pace than average.

This is designed to ensure enhancing workers’ rights does not trigger unsustainable wage increases. Mr Taylor will instead call for a system that offers the opportunity to earn at least the hourly minimum wage to people who want to earn more, make themselves available to work during times of demand, and work at an average pace.

He will say those who choose to be self-employed and work for several companies simultaneously will be able to enjoy extra flexibility but will not be entitled to a minimum income.

On the first point, the obvious question is how an employer like Uber would predict shift earnings. UPHD members can testify that Uber throttles job supply to drivers on a range of factors that are deliberately kept opaque. This was even reported upon by the New York Times this week. We know the dispatch algorithms discriminate and the field between drivers is not level so would an earnings prediction be based on what a driver could make or what Uber will allow him/her to make?

Next, tying up earnings commitments to average job completion rates in the transport sector is dodgy territory indeed. Here the driver and platform will get locked into a dangerous productivity game with drivers pressured to complete more jobs per hour to hit the earnings target. The implications for public safety are obvious. And what of those days when you just can't perform at the average rate due to unusual traffic congestion or horrendous weather conditions? Maybe there is a state visit in  central London for example or a snow storm. Is a driver to assume all external business risk factors and be denied the minimum wage in future that is guaranteed now? If so that marks a definite backward step.

Taylor suggests drivers suffer a penalty for 'knowingly' working during off peak times. However, in the private hire trade a driver must be able to cover overhead costs for vehicle financing and insurance. If he or she is to be penalised for working off peak then the on peak rate has to be much higher so that over head can be absorbed there. Otherwise the driver will have to 'knowingly' work off peak to cover his costs and he should not be subsidising his operator at unfair labour rates for doing so. The whole point of a minimum wage is that it should be applied across an average of all hours worked. One would certainly hope an Uber driver could make the minimum wage for peak hours but with this plan Taylor puts his foot on the scale in favour of app operators. He effectively gives Uber et al a pass by allowing them to guarantee the minimum wage only for the most profitable hours while dumping the unprofitable but necessary hours on to drivers without a minimum wage guarantee the current law provides for.

We've crunched the numbers for illustration. The first column shows average weekly hours and income for 'Top Drivers' published by Uber. The costs estimates are based on standard industry rates. We can see, as things stand now, even Uber's 'Top Drivers' earn below the minimum wage and would be entitled to protections with their 'worker' status under employment law.

However, if the proposals reported in the Telegraph are true, and if we estimate conservatively that 24 hours per week are considered 'peak hours' then we can see  from the below table that Uber escapes any responsibility to top up wages and holiday pay would only accrue on half of the hours actually worked. Worse still, drivers would be forced to work at a loss just to continue to make essential contributions to weekly over head costs associated with the vehicle. Working only peak hours would not be a viable alternative as it would see the driver earning only £6.19 per hour and when this is topped up to minimum wage, take home pay would be just £180 per week. A part time driver claiming in work benefits would immediately run into problems that would also effectively force him to work off peak hours at an economic loss. Remember, if you end up working for two operators simultaneously then all bets are off - no protections at all for you.


This off peak penalty is placed on the worker so as to head off 'unsustainable wage increases' and here we see Taylor's conscious bias. Uber has a fantastically profitable underlying business model so how can a minimum wage guarantee to its workers be 'unsustainable'? How about the fact that the London living wage of £9.75 per hour - where 30,000 or 75% of Uber's UK workforce live, a wage level to which the Mayor of London, who licenses London's private hire drivers, is a determined advocate - is substantially more than the national minimum wage of £7.50 per hour which Taylor discounts as 'unsustainable'for off peak drivers? How about the unsustainability of a driver working at an economic loss just to make a contribution to overheads? And what about the ebb and flow of workload of any worker? Should corporate mail office staff be paid less in the afternoon because they processed incoming mail in the morning? Should teachers be paid less for supervising play time or during summer holidays than for in class teaching time? Should firemen be paid less for periods where there are no fires? Should nurses working night duty be paid less than daytime nurses because many patients are asleep? Should flight cabin crew be paid less for duty on half full flights? This is the very nature of modern day labour exploitation that risks being now legitimised by Taylor.

The last point about multi operator employment is most troubling of all. Many workers have been forced into the insecure gig economy due to the absence of alternatives. Throughout the debate on the gig economy over the past few years employers have placed flexibility for sacrifice on the altar of security. It's always been a false trade off and now Taylor appears to be backing up a false argument. The reality for private hire drivers is that the only flexibility they really have is to work more hours. UPHD members already work 48 hours a week at an average of £6.4o per hour. There is no alternative app to work for and it would not be practicable to do so as a driver would be auto logged out of one or the other for not accepting jobs on one while engaged with the other. Now it seems Taylor will strip away the already minimal rights we have for the dubious benefit of the flexibility we need just to survive. In a private hire market that is already far over supplied this will only further accelerate a race to the bottom. Nobody expects a driver to be paid twice for the same period of work but we should not expect to lose the right to the minimum wage from one, other or a combination of both.

And yet none of this need have been rocket science. None of this is at all technology contingent. For years taxi regulations in British Columbia have had a perfectly simple and workable solution for drivers to be guaranteed the minimum wage. They simply reckon up with their respective employers once a month - if they fall short they are topped up. If they earn more then everyone is happy. But Taylor's solution could see UK drivers getting caught between two operators who oversupply the market deliberately and ensure the driver loses out on both flexibility and security.

As most are aware, UPHD co founders Yaseen Aslam and James Farrar are lead claimants in a successful claim brought against Uber at the London Central Employment Tribunal for worker status. This claim guarantees the right to the minimum wage and holiday pay for all Uber drivers. Uber have decided to appeal and the case will now be driven forward under the leadership of the IWGB union of which UPHD is now a branch.

To clarify what worker status means: it is a category of self employed status. Where someone is so dependent on the contracting firm, where they all but control a driver's business then drivers are entitled to some basic employment rights like the minimum wage and holiday pay. In our case the Employment Tribunal found 13 reasons why Uber truly controlled a driver's business and so qualified all drivers for worker status. The factors the Judge took into account includes the fact that Uber:

  • Selects & interviews drivers
  • Controls all information
  • Drivers must accept work
  • Sets routes
  • Sets price without any input from drivers
  • Manages driver performance
  • Refunds customers directly
  • Dictates contract terms
  • Manages all customer complaints
  • Provides guaranteed earnings schemes
  • Imposes terms of service
  • Holds sole responsibility for bookings
  • Accepts fraud risk (if truly independent a driver would have to accept credit card fraud loss)

Maintaining worker status is important to drivers because it sets a floor in the market below which no driver earnings can fall. Also, it enforces a carrying cost of capacity on Uber to stop it over supplying the market and flooding the circuit. Providing way too many drivers delivers Uber and customers an important benefit paid for by every driver - the benefit of immediate customer response. It is this instant response that keeps customers coming back to Uber. There is even a name for it: positive network effects.

Make no mistake, UPHD has an ambition for every driver to earn far more than the minimum wage. The first step though is making sure nobody gets paid less and that every operator, including Uber, is made to pay for the excess capacity it puts into the market. This not only helps stabilises driver earnings by matching driver supply with true market demand but it also prevents excessive congestion and air pollution - no small matter in London right now.

We have expressed concerns about how the Taylor review was carried out and today's reports, if true, just underscore that the review simply never really understood the problems of Uber and other operator's drivers today. We invited his team to meet and take evidence from drivers but they declines to do so.

The big question we will be looking to answer when the Taylor report finally comes out and we can review it properly is 'will private hire drivers be better or worse off?' If we are worse off as a result of the review then we must conclude the whole process was stitch up to entrench predatory platform commerce and insecure work in the UK economy.

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