Economy
Drivers who were once showered with incentives from the companies are now facing dwindling incomes and debt as Uber and Ola turn their attention to fiscal growth.

In mid-2015, Manjunath then, 31, was working for a micro-finance corporation based in Bengaluru and earning roughly Rs 30,000 a month. His work would involve moving around the city, collecting cash from clients and carrying it back to its various offices. Life was stable and Manjunath felt content.

“But then I saw one friend was earning Rs 1 lakh and above per month driving his own car in Ola and Uber. Even after deducting expenses of EMI (equated monthly installments), diesel, and maintenance, he would still have Rs 80,000 per month,” Manjunath recalls. “At that time, it seemed like I would earn more than a software engineer. So I thought, why shouldn’t I try my luck?” he says.

For Manjunath, it felt like a dream come true. Like many such drivers, Manjunath switched between the Uber and Ola apps in a single day depending on demand. He was primarily on Ola as he preferred the daily payment as opposed to Uber’s weekly payment.

“I would get Rs 6,000 bonus for doing 18 trips in a single day. First month, I was learning and a little confused. So I had earned Rs 70,000 only and then from the next month I would earn Rs 1,25,000 each. So even after spending on EMI, diesel and everything, I would effectively have around Rs 70,000 in hand for working 15-16 hours for six days a week So then, whatever the customer may have paid we would have got Rs 18/km,” he says.

File image

Working as a driver partner worked very well for a short while. But three years down the line, his vehicle was seized by the bank after he failed to clear his EMIs on time for two months in a row.

Stories similar to that of Manjunath aren’t uncommon. Several Ola and Uber drivers across Bengaluru told TNM that  from 2016 onwards, they have experienced severely dwindling incomes, an issue that activists and independent researchers say has plagued driver partners in big cities across India. Uber’s lowered incentives has also recently made headlines internationally.

In Bengaluru, homegrown Ola and its international rival Uber enjoy an unofficial duopoly without any substantial third player in the horizon. It’s a trend that can be seen in India’s Tier-1 cities and Tier-II cities, as traditional taxis lose their business to their new age app-hailed counterparts.

File image: Traditional black/ yellow cabs

With the market captured, these two companies have now turned towards profitability and reducing bonuses to near nil, resulting in high drops in income for drivers. The current situation is such because of the aggressive push made by these companies over the last five plus years to acquire both customers and on-boarding driver partners.

Manjunath started to notice the downward turn in mid-2016 as focus of these companies turned towards profitability after years of incentives for drivers.

“Now even if you do 30 trips, there is no promise of any incentive. Plus, with the increasing traffic, 18 trips would take 20 hours which would previously take 15 hours. And the pay for per km has also decreased to as low as Rs 9/km. Same goes for commissions, the commission was 10% initially, then it gradually increased to 15%, then 20% and now 25%,” Manjunath explains.

Initial frenzy and currently dwindling incomes

Since both Ola and Uber have more than one payment calculation model for these driver partners, it’s hard to clearly define the changes in drivers’ incomes. But multiple interactions suggest that drivers’ earnings can be roughly divided into two components: the variable charge per kilometre and conditional incentives based on a number of trips completed in a limited period of time. Drivers and experts say that incomes have reduced to one-third as compared to mid-2015, the work hours of 12-14 hours have stayed the same.

Rituparna Chakraborty, Co-Founder and EVP, TeamLease Services Ltd, a human resources company mostly working in the blue collar segment, explains the phenomenon.

She says, “In 2015, there was the initial frenzy where both cab aggregators enticed driver partners with lucrative offers and incentives aiming for rapid expansion and market domination. After battling intense competition they are now shifting focus towards profitability and Ola is planning to go public in the coming years.”

According to Manjunath, “At that time, around May 2015, Ola was arranging loans for drivers as a guarantor from State Bank of India. So with Rs 60,000 down payment, I got a Maruti Suzuki Ritz with an EMI for Rs 13,400 for five years. In my experience, I know without Ola, I would not have gotten a loan like that.”

And in mid-2015, there was even news of MBA graduates choosing to drive cabs and earning at least upwards of Rs 70,000 to Rs 1,00,000 and more. Rituparna says that the current average payout is Rs 22,000-25,000 per month.

A top management official in Ola, who spoke on condition of anonymity, partially agrees but justifies the change.

“For me, a lot of these conclusions sound exaggerated. For example, from the indicators in our system, per hour what the driver was earning excluding incentive has not dropped. Earlier, the commission of 25% or less, we would give it back to the drivers as incentives. Those incentives have been reduced. Earlier it was also done as not all times, they would get trips,” the Ola source says.

“But now there is enough business on the platform so whoever wants to earn that kind of money are working hard and earning it. Yes, there is some discontent among drivers. But Ola does not see it as threatening or the number as large enough,” he adds.

File image

The issue of discontent among drivers globally has been acknowledged by Uber in its market filing on April 11 at the US Securities and Exchange Commission. It said, “In particular, as we aim to reduce driver incentives to improve our financial performance, we expect driver dissatisfaction will generally increase.”

Ola and Uber have refused official responses to TNM’s queries.

Impacting driver partners

The worst for Manjunath in his cab business came in mid-2018 when he fell ill.

“I could not work properly for two months, And once I went back, I could not work as hard as before. My vehicle was seized as I could not pay the EMI. How can we pay the EMIs when we can't earn that much? There are not many bookings like before as vehicles have become much more. So now there is a case of more fishermen and a dearth of fish in the sea,” he humours.

“It is not only my vehicle, but there are also many such vehicles which are getting seized. Many people are struggling. I still have to pay Rs 10,000 to get my credit score cleared. They have said that once I pay this, my CIBIL score will be restored,” he adds.

Other irked driver partners, including Manjunath, have also lamented how additional offerings on Uber and Ola, such as shared cab, have been a bane for drivers.

The drop in incomes and shared cab offerings across the country have triggered protests by large sections of the driver in the past but to no avail.

Read: Ola, Uber drivers in Hyderabad protest low fares, declare a partial strike

PTI file image: Cab drivers protest in Mumbai

Like Manjunath, Vittal Hari, another Bengaluru-based driver had thought he would also cash on the Ola-Uber buzz. He bought two vehicles, reasoning that he would drive one himself and the other would be driven by a salaried driver. But now instead of thinking profits, he is unsure about how to continue paying salary to his driver.

“I still have one year of EMI left to be paid. And leave profits, some months I am at a loss. At one time we were getting Rs 15-Rs 18/km that too along with very good bonuses. But now we get maximum of Rs 10/ km and even after spending for the diesel, maintenance and paying the EMI, nothing much is left for saving even after spending 17 hours on the wheel,” Vittal claims.

He adds, “Every month, I have to give Rs 16,000-Rs 17,000 to the driver as well. So what is it left for me? Luckily nobody is dependent on me, so I am surviving”

Downgrade of lifestyle

After losing his vehicle, Manjunath is now working for cash management firm and earning a sum of Rs 20,000 per month.   

Drivers who are still in the system are forced to drive for more than 16 hours to make ends meet and sleep in their cars for 3 to 4 hours.

Sandeep, another Bengaluru-based driver partner, who mostly uses the Uber app agrees that while work has increased over the years, his income has seen a dip since he started.

“I start from home at 7am and come back only at 12 am the next morning. This means I am working more than 16-17 hours. On a good day, now I can earn a maximum of Rs 800-1000 after deducting the expenses and EMI amount. But business is not the same everyday.  So on Mondays, business is usually good but Tuesdays, Wednesdays are bad,” he shares.

This means that at the end of the month, Sandeep is taking home an income of Rs 26,000 to 28,000, if he takes a day off once a week.

“Now for the last one year, I am forced to cut down on expenses. I go out less with my family. Before I could think of having snacks in the evening from outside, now I avoid it. I am surviving, as I have a house of my own and do not have to pay any rent or EMI for that purpose. But even then I can’t make time for my family,” Sandeep explains.

These stories are not isolated. There have been reports of drivers attempting suicide failing to get out of the debt trap.

Read: Uber driver ends life in Hyderabad, family says he was under pressure to pay car EMI

Tanveer Pasha, Uber, President of Uber, TaxiForSure and Ola (UTO) Drivers and Owners Association, who has also contested the 2018 Assembly Elections for JD(S) in Shantinagar, said not only drivers are in a financial mess but are also facing a health crisis.

“So if I have to earn Rs 40,000 now, I have to drive 18-20 hours. If i do that, you tell me what will be my health condition? Many drivers are having many health problems. Not only physical but also mental health issues. The stress level is too high. Why do you think these cab drivers fight with other people on the road? This is because of the mental pressure,” he says.

Sandeep agrees, “Driving for this long causes us a lot of health problems. Sometimes even If I am tired, I am not able to sleep. Because of this tension of paying back EMI, we might not be able to speak to our customers properly.”   

Notably, drivers are now moving out of the Ola and Uber driver platform, but it’s unlikely to severely affect either company.

Rituparna explains, “Both Ola and Uber are battling very high driver partner drop off rate, but this is offset by many new ones who are signing up. The grouse with the older set is the lowering of incentives owing to a larger fleet size; the market is now steadying post the exponential growth years. The newer sets who are signing up are better prepared for the new reality of incentives and pay-outs and hence willing to work longer hours in the pursuit of owning their own vehicle. With Ola/Uber taking a standoff attitude and no sign of government interventions these driver partners are at a loss.”

She also observes while both driver registrations and supply of vehicles has dropped from 2016 to 2019, they have also seen market stabilization and growth. Both Uber and Ola have also announced aggressive expansion plans.

Industry analysts say that even if the driver partners chose to go to a third player which offers better pay and commissions as low as 5%, these driver partners return due to a dearth of customers.

Systematic abuse

Independent researchers and activists point to the hard bargain that these drivers are forced to settle for in the name of self-employment or independence.

Noopur Raval, who is coordinating a research study on the gig economy in India for Centre for Internet and Society, argues the exploitation of drivers stems from multiple issues, including the payment structure, lack of knowledge in contract negotiations and health problems as a result of long working hours.

“The bigger problem, especially in India, where ride-hailing is not a peer-to-peer market (using your personal vehicle, not requiring commercial plates) is that people who drive for Uber remain a part of the ‘underclass’ of service-workers who serve the middle and upper middle class passengers,” she argues, adding that the long hours “leaves no time for upskilling, reskilling or finding other work options in life.”

“One of the globally experienced issues with driving for companies like Uber, Ola etc is that the drivers are not employees of the company or even contractors in the traditional sense. This means that they do not enjoy any paid leaves or get personal or vehicle or accident insurance coverage for doing their work.”

“As drivers have often asked if they (individual drivers) are business-owners or entrepreneurs, then why is Uber setting the prices for each ride? Why does Uber get to decide how and how much incentive a driver makes on a ride? Most importantly, in the past, Uber and other companies have punished drivers who try to get regular passengers outside of its platform. If Uber is only a technology intermediary then why is it deciding the terms and conditions of the actual driving work?” she asks.