The problem with Uber’s European job promises

The newly humble Uber has made its pitch to city officials around Europe by promising the creation of “50,000 jobs” during 2015 – if mayors and their transport departments play nice and change their taxi regulations.

On Sunday, in a company blog post and a speech by CEO Travis Kalanick at the DLD conference in Munich (embedded below), Uber called for partnerships with European cities that it said would increase efficiency and reduce emissions. All that’s needed is for the cities to make like Kolkata and stop trying to make Uber play by the same rules as taxi firms. On Friday a suburb of the Indian city (not the whole of Kolkata, despite what Uber says) decided Uber was an IT firm rather than a cab service – a decision at odds with that made in other cities such as New Delhi.

Kalanick and his firm also claimed that E.U. taxis frequently operate “off-grid” (which may come as news to his more tightly-regulated rivals) and said the introduction of Uber would “increase transportation providers’ compliance and overall tax revenue for cities and countries across Europe.” Uber also pointed to its recent launch of city data-sharing programs, saying it could help manage growth, reduce congestion and so on.

What’s a job?

For a start, I personally find Uber’s definition of a “job” to be a bit confusing. One slide in Kalanick’s DLD presentation talked about the jobs that have been created in various cities through Uber’s presence: 7,500 in San Francisco, 13,750 in New York, 7,800 in London (according to Kalanick himself; the slide said 10,000). However, Kalanick started off this part of the talk by carefully referring to “equivalent full-time jobs” – “Remember, we have people driving on the Uber platform full-time, and people driving 5-10 hours a week” — then slipped into plain old “jobs”.

So, is this 50,000 actual full-time jobs or a combination of full-time jobs and many part-time jobs that all add up to the equivalent of 50,000 full-time jobs? If tax is the public authorities’ concern, then this distinction makes a significant difference. Someone who’s making a small amount of money on Uber may not, if that’s their only income, be liable for any income tax at all due to minimum thresholds. Of course, this will only account for a certain proportion of the people we’re talking about, but a breakdown is necessary if cities are to look beyond the attraction of the headline figures.

I’m assuming that Uber’s enthusiasm for greater tax revenues is limited to income and sales tax – the company has established a complex network of subsidiaries to ensure that it itself pays very little corporation tax.

Most seriously, we must also remember that these jobs, whatever the numbers, are positions of self-employment that don’t come with any job security or social benefits. This status also creates issues around liability – an implication of the Bidhannagar/Kolkata decision that has been keenly debated.

On a side note, I was also struck by Kalanick’s claim that Uber could give cities “more efficiency on your existing mass transit options”. Yes, tempting people off mass transit and into Uber cars (or, better from an environmental perspective, UberPool cars) would ease the burden on said mass transit, but it would also reduce revenues, meaning that the public option may need to become more expensive or less well-maintained – both good outcomes for the private alternatives.

Political impact

I do agree with Kalanick about protectionism, to an extent at least. The taxi firms that have been giving Uber a hard time and bending local politicians’ ears obviously don’t want price-cutting competition, and rules that limit the numbers of transportation providers in a given city should be up for debate.

That said, I still firmly believe that the traditional cabbies are right to complain about competition that is allowed to operate according to different rules, putting them in a disadvantageous position. City officials do need to formulate new rules, but they need to be very cautiously calibrated to ensure safety and accountability.

What’s more, those officials have to recognise that the kind of employment Uber is pitching marks a big socio-political change, particularly in broadly social-democratic Europe. Kalanick may be in favor of European-style (debatable, I know) social insurance programs such as Obamacare because they “allow people to have more flexible ways to make a living”, but the model he’s pushing would deny such programs any employer contributions. Depending on the country, this would put more of the social insurance burden on the state and/or the self-employed driver.

That’s great for aggregators such as Uber, which are absolved of any responsibility for their not-employees’ healthcare, pension and general social wellbeing, but not so great for the public authorities running such schemes.

Perhaps services such as Uber do represent the future of urban transportation — there is a genuine case to be made for the impact on emissions and efficiency, particularly when it comes to carpooling. But, as they manage the transition into the future, city and national officials had better take the more seductive claims about revenue with a scoop of salt, and think very carefully about the implications.


This article was updated on January 20th to note that it was only a suburb of Kolkata, not the whole city, that recognized Uber as an IT company.