COVID-19 & Delivery Workers: health risks and essential help in the same package

Delivery blog

Mikko Perkiö, Arseniy Svynarenko, Benta Mbare and Victor Savi.

The COVID-19 pandemic and the measures adopted by many governments and cities resulted in slowing down urban life, closing businesses, and locking people into their homes. Social distancing works for public good and it increases the need for efficient grocery and food delivery services. These services help solving public health problems though they include critical health and social protection aspects themselves.

Increased demand for grocery delivery

Most typically, the ‘flatten the curve’ policy included various limitations on mobility of people (without interrupting transportation of goods), closure of educational premises and other public venues. Private services such as restaurants and bars can either be ordered to complete closure or their kitchens are allowed to serve food to clients at home through various delivery platforms. Many countries, regions and cities have gone into a complete lockdown or even curfews. The reports published recently by Google or Apple demonstrate COVD-19 epidemic affected urban mobility in various parts of the world.

Picture 1. Changes in urban mobility on March 29th, 2020 when compared to a median value for the corresponding day of the week, in early February in Lazio region (Italy), Greater London (UK), New York (USA), Uusimaa region (Finland) Stockholm County (Sweden). Source: Google COVID-19 Community Mobility Report).

When people are advised to stay at their homes for longer period of time this eventually leads to an increase in demand for delivery services: someone has to bring groceries, ready food, medicine and other online purchases to people at their homes. In the US, Russia, and some other countries the governments have defined delivery work as part of essential critical infrastructure at the time of crisis and allowed delivery people (who can confirm that they carry on their assignments) freely move disregards the lockdowns (CISA, 2020)

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Taxi platforms respond to COVID-19

by Arseniy Svynarenko and Mikko Perkiö

SARS-COVID-19 has significantly slowed  down economies and stalled life in many cities across the globe. This hits very badly millions of taxi-drivers, among them Uber and other platform drivers whose social rights and security are least protected. The platforms react to the crisis in different ways.

Pandemic hit hard both global and local economies

The SARS-COVID-19 epidemic started at the times of reported emerging trade barriers, escalating geopolitical tensions. The World Economic Forum (2019) describes how weakened international collaboration damages collective will to tackle global risks. In December 2019 the growing epidemic caused closure of many Chinese factories and created difficulties for corporations, which rely on Chinese industrial capabilities. In early 2020 the pandemic has hit the international travel, small and big businesses across the globe. And by the middle of March the grim economic projections foresee a global Corona recession.

One of the first measures to tackle the spread of the virus was restriction of people’s mobility. Governments across the world started to screen or ban travelling and travellers first from specific and then more broadly. National borders have been closed and in epidemic areas these measures moved into more severe restrictions of mobility between regions and in restricted areas. Social distancing has resulted in governments and businesses asking people to stay at home, to work remotely when possible, and avoid social contacts. Shopping malls, concert halls, and theatres are closed. Trade fairs, conferences and entertainment events have been cancelled. To enforce nation-wide quarantines some countries (for instance, Slovakia and Czech Republic) banned passenger transportation by taxi platforms allowing only grocery delivery.

The politics and reactions by governments for control of COVID-19 pandemic were brought up by Salla Atkins and Meri Koivusalo. Here we focus on implications of the COVID-19 pandemic on platform economy workers, zoom on taxi-drivers. We analyze also how platform providers have reacted to the epidemic.

Taxi sector and pandemic wave

The COVID-19 pandemic with a dramatic decrease in social activities and consumption has an immediate impact on most business sectors, including transportation of people. Taxi companies estimate 80-90 % decline in numbers of taxi rides within a week between 13-20 March. Finland’s Taxi Association officially “Suomen Taksiliitto” demands local and state responsibility for income compensation for taxi entrepreneurs, who suffer from the suddenly ended school transport as one major aspect of the reduced mobility. Media reported on 31 March that the government of Finland had introduced a flat sum of 2000 euros benefit scheme for those solo-entrepreneurs and freelancers, whose business is substantially weakened by the Corona crisis. There is funding for 50 000 persons. The implementation of the scheme at the municipality level is under process. Furthermore, the government of Finland will extend unemployment benefits temporarily available for the entrepreneurs, although the final details about the scheme are to be decided. Both these schemes help entrepreneur-workers, like Uber drivers, to cope with their severe business losses in this unusual situation.

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Will uberisation become a means to shrug off employer responsibilities?

A research project underway at Tampere University examines whether uberisation will continue to have a positive impact on the taxi industry in Russia and to what extent it will gain ground after Finland’s taxi industry reform.

Uber has been expected to revolutionise personal transport, but in reality the effects of uberisation have been strongly dependent on locality. The most common consequence of uberisation seems to be that companies are using legal loopholes to shirk their responsibilities as employers, which is most often seen in the USA.
 
Uber was established in the USA in 2009 to connect taxi drivers with potential customers through a taxi hailing app. The company has since gone global. Uber and Airbnb, an online marketplace for hospitality services, are examples of platform businesses: they provide a platform that brings together providers and consumers of a particular service.

Uberisation has so far demonstrably increased the use of taxi services and reduced the size of the shadow economy in Russia. In Finland, Uber rides could potentially fill the gaps left by the failed taxi industry reform carried out under the Sipilä administration.    

A research project exploring the effects of uberisation on the regulatory landscape in Finland, Russia and the UK has been launched at Tampere University. The researchers will look into Uber and other similar platform taxi services in relation to regulation and working conditions in Helsinki, London and Saint Petersburg.

Director of the project, Professor Meri Koivusalo suspects that platform businesses such as Uber may be basking in undeserved glory and may actually be just run-of-the-mill companies.  

”If there is nothing new and exciting about the platform economy, then it can be regulated as any other business and will not reshape our welfare state as much as we have been given to understand,” Koivusalo says. 

Taxi reform could ramp up demand for Uber

What could be fuelling the demand for Uber rides in Finland is the failed taxi industry reform that was carried out during the premiership of Juha Sipilä. The reform raised prices and resulted in a marked decline in the availability of taxi services in rural areas.   
 
”The reform could push customers to use Uber, because it is predictable and provides upfront pricing,” Meri Koivusalo says.
 
Responsible researcher in the project Mikko Perkiö says that Finland took a step backwards with the taxi industry reform. People are now expected to spend time looking for the best deal and negotiating fares when all they want is a safe and reliable ride to their destination.  

With Minister Anne Berner at the helm, Finnish policymakers believed that the liberalisation of the taxi market would benefit everyone. The reform promised to drive prices down and improve services. In fact, the opposite occurred.   
 
”Finland followed Sweden’s lead – and made the same mistakes. The reform leaves the door open for Uber but hopefully the trade-off will not be too costly in terms of labour standards,” Perkiö says.    

Meri Koivusalo/ Kuva: Jonne Renvall

Professor Meri Koivusalo is heading a project that explores the regulation of the platform economy and the effects of uberisation on labour standards. Photo: Jonne Renvall

Uber’s arrival reduced Russia’s shadow economy

In Russia, where it has long been customary that anyone with a car can offer a ride to anyone hailing a cab at a street corner, uberisation has increased the use of licensed taxis.

Mikko Perkiö quotes the results of a study carried out in Russia indicating that the number of taxi rides within Moscow increased dramatically in the 2010s, from 50,000 in 2010 to more than 700,000 in 2017. This growth is largely due to more rides being booked using mobile apps.

Another Russian study demonstrates that 90 per cent of Uber drivers operating in Russia’s major cities are satisfied with their driving experience, although 40 per cent of them are considering a job change. Two thirds of the drivers had been unemployed before joining Uber.   

”The arrival of Uber – which merged with the taxi service of the Russian IT behemoth Yandex in 2018 – and other ride-sharing companies that utilise real-time vehicle location tracking has not only improved passenger safety but also increased predictability. Now we know our cab driver, route and fare upfront. Uber seems to have been an optimal solution for cities where unlicensed taxi services have previously been rampant,” Perkiö says.

Independent contractors versus full-time employees

In the USA where employers shoulder the lion’s share of healthcare and social security costs, uberised business models have emerged as a way to shrug off employer responsibilities. The effects are less strongly felt in many European countries where these costs do not take such a heavy toll on employers.

Still, the loudest Uber critics are found in Europe. The researchers reckon that this may partly be due to trade unions being stronger in Europe than in the USA.

According to a study conducted at the University of Jyväskylä three years ago, uberisation has reduced taxi fares, increased the demand for rides and boosted economic growth around the world. The study at Tampere University focuses on regulation and the working conditions of drivers.    

”We are keeping an open mind to both the negative and positive effects of uberisation,” sums up Meri Koivusalo.

Uber is basically an application, a technology platform that could also be used to achieve and maintain regulatory compliance. Koivusalo points out that this is a perfectly feasible option.

”We need to ask whether national authorities have enough regulatory leeway in this area or whether it will be necessary for countries to adhere to international regulations. Or will international companies be expected to adjust their activities to comply with national law?” 

Mikko Perkiö/ Kuva: Heikki Laurinolli
Researcher Mikko Perkiö says that the effects of uberisation are largely dependent on locale. Photo: Heikki Laurinolli

Bigger employment issue than Uber

Uber is a part of the platform and sharing economy that extends far and wide from rental market to delivery services.
 
“The same principles are seen in the social and healthcare sector. There are visions to apply a similar platform approach to the development of hospitals and even universities,” Meri Koivusalo says.

She doubts whether the platform economy will in reality pose such an inescapable threat to the foundations of our welfare state as is often claimed.

“There is no reason why platform economy could not be regulated as any commercial activity. It comes down to policy-makers to decide whether they are willing to at least try.”  

Mikko Perkiö compares Uber drivers to freelancers and self-employed people who usually do not have a similar safety net to fall back on as salaried employees. Self-employed workers make up about 15 per cent of all workforce in the EU. In the UK, the gig economy employs one third of workers under the age of 30. The platform economy is a catch-all term that encompasses a variety of jobs ranging from Uber drivers to food delivery couriers who may be struggling to make ends meet.   

The platform economy is a broad and complex phenomenon and not all the related problems are associated with social security and poor working conditions. Perkiö points out that most Airbnb hosts are middle-class homeowners or hospitality entrepreneurs. The home-sharing company has been widely accused in Europe for hurting the hotel industry and driving up rental prices but has not been blamed for eroding labour standards.

It is possible to regulate the platform economy

Even before the current research project was launched, Meri Koivusalo has kept a close eye on the amount of regulatory leeway that the EU provides to individual cities in Europe. This leeway will have a major effect on the regulation of the platform economy.

”The most important question may be whether regulatory controls can be imposed at the national or European level. It is likely that most of the political wrangling will have to take place between multinational companies and the EU, which may be challenging for the EU.”

According to Koivusalo, the emergence of the platform economy poses new regulatory challenges but also opens up new possibilities.    

“In the future, platform businesses may be regulated differently and from different perspectives than regular companies. These companies may try to give the impression that they cannot be obligated to do anything because they are not employers. This may be a conscious political choice.”

The project headed by Koivusalo received funding from the Academy of Finland’s Research Council for Culture and Society last spring. The project is set to continue until the end of 2021. Researcher Arseniy Svynarenko will carry out research in Saint Petersburg.

Text: Heikki Laurinolli

Source: https://www.tuni.fi/en/news/will-uberisation-become-means-shrug-employer-responsibilities

Uber – Social inclusion or new risks for immigrant drivers? by Magdaleena Lehmuskoski

As global migration accelerates, the integration of immigrants challenges societies. Could platform models, such as Uber, provide social inclusion or do they merely entail new risks?

Uber is a controversial global ride-sharing company providing a platform to connect drivers and passengers. It employs over one million drivers, many of them immigrants. Requiring virtually only a driving license and a vehicle, Uber provides immigrants low-threshold employment while other jobs are hard to find.

Uber promises its drivers flexible, supplementary work. However, many immigrant drivers depend on Uber as full-time employment. Wishing to find a job, they are often compliant with low salaries and limited rights. On average, Uber drivers earn the minimum wage or less. Compulsory expenses, such as commissions, insurances and vehicle costs further increase the risk of economic hardship and indebtedness.

Uber classifies its drivers as self-employed, which shrewdly shifts responsibilities and risks to the drivers. Weak social protection increases the drivers’ vulnerability. In case of social risks, such as accidents, sickness or unemployment, they are liable to cover for themselves. Furthermore, weak regulation creates job insecurity. Uber drivers might get fined or sacked if they reject too many trips or receive poor feedback. A big labour reserve means that they are easily replaceable.

Taxi drivers are exposed to discrimination based on race, ethnicity and language. Though the Uber feedback system is intended to protect drivers and passengers, it has also been accused of unreliability and discrimination. Immigrant drivers have been given poorer ratings based on ethnicity. Rides have also been cancelled once the driver’s racial background has been discovered. Lower scores reduce booking rates and increase the risk of dismissal. This severely compromises the livelihoods of immigrant drivers.

Undoubtedly, Uber offers immigrants prominent employment and integration opportunities. However, their livelihoods being heavily dependent on Uber imposes immigrant workers to a cycle of socioeconomic vulnerability. As labour demand remains insufficient, economic circumstances pressure them to silently endure. Hence, governmental policies should more decisively promote fair organization of work and social protection coverage of all workers regardless of ethnicity.

Original publication