My Sunday school teacher would have thought we have indeed arrived in the “final days”. She might still think so. Who would’ve thought that we would witness “mass action” against a tech company run by geeks in Silicon Valley?
Of course, the worker on the receiving end of the political wrath would not answer to a San Francisco address, but be found in the wrong Sandton sideway at the wrong time. It reminded me of the Luddites. The Luddites were a group of 19th century English textile workers who, scared at the prospect of losing their jobs to machines and technological advances, staged violent protests. These protests often included the burning of power looms and stocking frames, “innovative” and labour-saving machinery of the time.
The reason I was reminded of the Luddites was the picture of a concrete block shattering the windscreen of a 2013 Toyota Corolla, the kind all uber-cool Braam types know belongs to Uber drivers. My first perspective, when the first skirmishes between Uber drivers and meter taxi drivers occurred last year, was that the meter taxi drivers were Luddites who were just protecting their turf.
This attitude was prompted by many rides in 1993 model Toyota Corollas with no heater in the middle of winter, after a night out. There was also the price determination issue, I just felt that prices were set on a whim, with the service relationship often bordering on what Mbuyiseni Ndlozi calls “ageism”.
Enter Uber, with cheap tariffs, newer vehicles and the convenience of requesting a trip at your convenience. To top it off, you could get a fare estimate, which gave you a sense of how much the trip would cost. Surely such innovation, which matches convenience with low prices, was an example that technology was a great leveller. More important, Uber drivers were “partner-drivers” which meant that they in effect ran small businesses that deployed technology, at a cost of 20% of trip value, but that could be made up in volume, right? Not really.
The Uber model is part of a series of innovations that deploy mobile applications to pair service or product providers with customers. In other words, the app links workers with work. This simple model is part of something called the sharing economy or “peer economy”, which is based on the idea that technology can facilitate access to a product or service, without the need for ownership. However, as Avi Asher-Schapiro argues, there is much to the sharing economy model that is similar to the ABI Driver Empowerment Programme discussed in Casualties of Cola;
“Uber is part of a new wave of corporations that make up what’s called the “sharing economy”. The premise is seductive in its simplicity: people have skills, and customers want services. Silicon Valley plays matchmaker, churning out apps that pair workers with work. But under the guise of innovation and progress, companies are stripping away worker protections, pushing down wages, and flouting government regulations.”
Surely these words, I thought, may have been the musings of a fellow leftist Luddite based in America, and the views of South Africans would be different. More important, I would seek out some of the meter taxi operators, who are enraged by the invasion of their turf by a techie mafikizolo.
I spoke to three meter taxi operators in the West of Johannesburg, whose views centered on three issues they felt had led to the desperation that manifested in violence last week. Two related issues that the metered taxi industry argue provide an unfair advantage to Uber are the issues of regulatory avoidance and uncompetitive price behaviour. I also argue that the latter is only possible through the prevalence of what Asher-Schapiro mentions above; stripping away worker protections, pushing down wages, and Herculean working hours.
If there is anything that this furore has exposed, it is how the authorities charged with regulation of the meter taxi industry were found flat-footed by the “sharing economy”. Many of the drivers I spoke to cited the hurdles they had to overcome to get “permits”, which they allege many Uber drivers didn’t possess. Some of these hurdles involved having a set point where you pick up customers, and where you would “bind” in taxi terms. Uber drivers didn’t have such hurdles, and would often pick up customers in the proximity of their latest drop-off. This is not possible for the metered taxi drivers, largely due to the strictly policed rules of where one can work and “routes”, similar to the minibus taxi industry. A driver named Brown posed the question of preferential treatment given to the tech driven service;
‘As a prerequisite, whenever you go and apply for a permit there, you need to have your starting point. Uber doesn’t have a starting point. Our people cannot get permits there because they do not have a starting point, but why is Uber then getting the permit?’
Uncompetitive Price Behaviour
It is clear that the claim that Uber receives preferential treatment is not only confined to regulatory criteria related to “routes” and areas of operation. It also extends to the pricing and rate the meter taxi drivers suggest is the regulated rate which is R12.50/km, whereas Uber was operating at much lower and often variable rates. In July 2015 the Gauteng government urged the Uber taxi drivers to secure meter taxi licences, and by extension subject themselves to the regulations associated with that licence. Which would probably mean a rise in their current R6/km and 60c a minute offering?
How does Uber, after taking its 20% cut, still manage to undercut meter taxis? Simple, just like you access your service, they access their “cut”, without ownership of the underlying resource driving the business; the vehicle. Just like Amazon doesn’t own an auction floor, or AirBnB doesn’t own any bed, it’s the sharing economy family. Ownership costs and associated insurance and maintenance of the car is simply the onus of the “partner-driver”. And, in this partnership, the partner with the technology gets to have significant bargaining power; they can deactivate a “partner-driver” on the basis of poor performance.
Surely this is the “perfect” functioning of a competitive system based on performance? Not at all. Not if that performance in order to settle the instalment, insurance premium, petrol and tyres, eats into the surplus the partner-drivers expect. It is even worse in instances where the “driver” is not the partner-driver, as is often the case. Where the owner of the car employs a driver to run the business, this often means a smaller cut for the “labourer” of the remaining 80%. In these instances, what Asher-Schapiro says is interesting;
“….under the guise of innovation and progress, companies are stripping away worker protections, pushing down wages, and flouting government regulations. At its core, the sharing economy is a scheme to shift risk from companies to workers, discourage labour organising, and ensure that capitalists can reap huge profits with low fixed costs. There’s nothing innovative or new about this business model. Uber is just capitalism, in its most naked form.”
It is interesting because this view contrasts the convenience narrative and “innovation” associated with Uber in the telling of the events that occurred in Sandton last week. If we are to innovate it must surely also be towards the social ends, which in South Africa involve the eradication of exploitation and economic injustice. It is not that the meter taxi drivers do not want technology, or are 21st century Luddites. It is that they want technology, and wish that the democratic state they have placed their faith in would level the playing field. Level it by providing them with the technology, not just by regulating Uber, as Brown noted;
“They (government) need to help us, more especially with the technology that Uber is using. We need that technology. The technology is 100%, we want it. Now the government should come in and assist our people.”
Resistance to the sharing economy’s invasion or what Brown called “the capture of our industry” is not a phenomenon isolated to South Africa. It is also present across Europe and the United States and other places. In South Africa it takes on a character befitting the drama of our post-apartheid society. Replete with the fire and brimstone of everyday struggles, the contest between Uber and the meter taxi industry is far from over. The words of a meter taxi driver known as Bin Laden are as defiant as the exploits of his namesake;
“They are just using our people for mahala, they make us fight among ourselves… this is the colonial economy and we don’t want it.”
Just as I had been reminded of the Luddites, I remembered what my first-year Information Systems lecturer meekly defined as the “digital divide”. Little did I know then how divisive it can potentially be. Uber might be useful for the cheap rides and that lesson. DM
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Ayabonga Cawe is an economist by training, and aside from a short stint as a researcher at a government agency, he has never been a disciple of market doctrine. He speaks and writes on history, political economy and public policy. A pan Africanist, he earns his keep in the development sector as a project manager, but is often found in watering holes of the city, camera in hand holding court with other restless youth of different persuasions.
Canola oil is named such as to remove the "rape" from its origin as rapeseed oil.