Uber, the riding sharing company, has recently under gone a run of bad publicity. Ok so maybe thats a understatement as #DeleteUber continues to trend. But are these perhaps just hallmarks of what is a fundamentally a toxic, but currently profitable, business model?
Efficiency savings, or the pursuit of them, has been the mantra of business and government for many years as a way of creating wealth and value. Uber is just the latest in a long line of companies who have sought to enter and disrupt a sector through delivering such efficiencies.
Uber’s disruption of the market is clearly seen by considering its position with the surrounding business eco system. Uber as an app only service could have been positioned as a user to business to business service. A service that allows the individually to immediately secure a taxi through trusted local taxi services.
However Uber’s sought to go beyond this middle man service and instead created its own driving force, which critically it then seeks to disavow.
The creation of this literal driving force has perhaps been facilitated by a number of external factors,
- the presence of GPS systems deskilling a trade, local detailed geographically knowledge is no longer required
- the great depression creating redundancy cheques to facilitate vehicle purchase
- the great depression creating low interest rate environments again facilitating vehicle ownership
- the great depression creating labour with reduce wage expectations
- the prevalence of smartphones and realtime data aware apps
These factors combine to create a large, human driving force who could then be leveraged into a owned market. That of private hire vehicle.
This owned market is then encouraged to manifest into a gig market. This gig market creates the gig economy presenting as easy for individuals to enter into, requiring no ongoing commitment and offering no coherent individual branding opportunities. Critically as the owner of the market they seek to claim no ownership of the labourers within the market which also prevents the bonding of employees into unions. Consequently they then excuse themselves from the typical employer obligations. It is this, that creates the efficiencies and grants Uber a competitive edge.
This model is increasingly prevalent in a number of different industries (food delivery) and typically leverages similar factors. It then typically seeks to create and control a market to then disavow employer responsibility.
As a business model the primary advantage (or efficiency), is through the redefinition of the employee/employer relationship to create cost savings. This new type or employee relationship, non exclusive and non committal, may become the primary method of employment. To suggest it is bad is to simplest. However, I would suggest that it is intrinsically incompatible with the anticipated norm of PAYE, employer national insurance contributions and the identification of on shore profit.
Companies of this model can perhaps be anticipated to pay limited national insurance contributions, limited local and national tax, limited employee benefits and even evade the need to provide sustaining employment, for as long as new entrants can be found.
While Uber is a possible example of this concern, it is clear that Uber intends to move from this model in the future. Human drivers are likely to be replaced by automated self driving cars. Consequently, while concern at the emergence of the gig economy owned markets is valid, the drive of future large scale automation systems perhaps makes such concerns temporary and a distraction from larger existential employment problems.