“OUR business would be adversely affected if drivers were classified as employees instead of independent contractors”.
This was a declaration by Uber before the tech giant was listed on the New York Stock Exchange in 2019. A few months down the line, a UK ruling has just done that and in South Africa, there’s a similar legal challenge that may lead to Uber drivers (independent drivers) becoming classified as employees.
There’s also a likelihood that other countries may follow suit. SEC filing by Uber before the company was listed also went on to state that any such reclassification would require the company to fundamentally change its business model, and consequently would also hurt its business and financial condition.
Legal firms have confirmed that the landmark ruling has wider implications on the gig economy and means that affected Uber drivers are now owed backdated minimum wages and holiday pay which confirms the risk highlighted by Uber in its SEC filing. What will Uber do now?
Firstly, Uber appears to be changing its position on this matter at least for the European market, its CEO has acknowledged the need to treat drivers fairly.
He said recently in a post to the Uber community: “After taking an honest look at how our platform has benefited worker – and, importantly, how it hasn’t – we’re committing to change. We believe independent workers across Europe deserve better: work that offers flexible and decent earning opportunities when they want it, and protection and benefits when they need it”.
This appears to be a real change of heart. However, the reality is far from it. Recently, SAFM radio host Aldrin Sampear facilitated a discussion about Uber and the gig economy. During the show, a view was highlighted which seemed to suggest that Uber and the gig economy should be considered as part of a solution to the unemployment challenge in South Africa. This is partly suggested because there’s a view that if Uber drivers are adopted as employees this will hamper the ability of companies like Uber to offer income-earning opportunities for many of its driver network as independent drivers.
The truth about Uber, however, is that in the long run, this tech company does not need drivers as workers, here’s why.
Uber has created a new tech startup, Serve Robotics, which will focus mainly on delivery without the need for human beings. This company comes out of a business, Postmates, that Uber acquired in 2020 for $2,65 billion.
Serve Robotics “will continue spearheading the development of a new form of mobility by creating autonomous robots to deliver goods in urban environments”, a statement from the new company said.
Serve Robotics will bring food and other everyday items to the homes of Uber customers without any help from humans at least in the US for now.
The goal for Serve Robotics is to prove how you can more efficiently deliver small items using small vehicles, instead of asking drivers of cars to deliver individual takeout meals, as to how UberEats and its rivals operate today.
“While self-driving cars remove the driver, robotic delivery eliminates the car itself and makes deliveries sustainable and accessible to all,” said Ali Kashani, co-founder, and CEO of Serve Robotics.
“Over the next two decades, new mobility robots will enter every aspect of our lives – first moving food, then everything else.”;
Delivery robots have proved popular in the US over the last year while people have been told to stay at home, and even as people move on from the pandemic demand for convenient deliveries with minimal human contact will likely remain appealing for many consumers, especially in congested cities where delivery of small, perishable items by car or truck makes little sense compared to a robot navigating the sidewalks.
What this seems to suggest is that Uber will do something about the potential threat to its bottom line in the form of independent drivers becoming employees. In its arsenal, Uber is preparing its robotics company to replace drivers altogether in the long run.
This should be understood by people who suggest the gig economy should be part of a solution to unemployment challenges. The gig economy should be seen as a temporary intervention to the unemployment challenge. In the long run, robots are seen as key tools in carrying out basic tasks.
Uber popularised the gig economy and now that the model is threatened the tech giant is working on plan B. Are we likely to see the gig economy threatened by robots? To find an answer to this question, watch carefully what Uber does and not what Uber says.
Wesley Diphoko is the editor-In-chief of Fast Company (SA) magazine. More about him here: www.wesleydiphoko.com
*The views expressed here are not necessarily those of IOL or of title sites