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Sabrina Korreck, “COVID-19 and India’s Gig Economy: The Case of Ride-Hailing Companies,” ORF Issue Brief No. 377, July 2020, Observer Research Foundation.
Digital technologies fundamentally change how people work and one of the key transformations in the future of work is the rise of the so-called ‘gig economy’. Central to the gig economy are so-called “gigs”, i.e. temporary and often short-term jobs, which can be found through digital labour platforms that connect job providers and job seekers. The ride-hailing giants Uber and Ola are prominent examples of such platforms, with their on-demand taxi services having become widely popular. The US-based Uber began operating in India in 2013, while homegrown Ola, a few years earlier, in 2010. They are the two main competitors in the Indian market, which is worth around US$ 30 billion and was (before the pandemic broke out) projected to grow by 15.5 percent to US$ 54 billion until 2023.[1] However, the COVID-19 crisis marks a caesura, as an entire workforce of drivers – estimated to be more than 4 million[2] –lost huge parts of their income. A lack of labour protections pushes them to continue working, despite health risks for themselves and their passengers.
This brief builds on a review of the latest literature on the subject and pursues three objectives. First, to outline the core risks that drivers are exposed to in the ongoing pandemic; second, to describe the COVID-19-related responses undertaken by the two major ride-hailing companies in India, Ola and Uber; and third, to evaluate these measures. The brief concludes by highlighting the lessons that can be learned from the crisis.
Risks of Informal Work Mirrored in the Gig Economy
Gig work deviates from the “standard employment relationship”, in which work is full time, indefinite and part of a subordinate relationship between an employer and an employee.[3] Characteristic of the non-standard employment in the case of Uber and Ola is that drivers work on demand, and are referred to as “independent contractors” who are seen as operating their own business and then contracted to provide certain services. However, this classification is highly controversial. The opposing view is that drivers need to be legally treated as employees, because they usually carry out tasks for one or few clients (i.e. Uber or Ola), on whom they strongly depend for their source of income and who closely supervise their work (i.e. through the algorithms of the app). As drivers currently do not have the legal status of employees, they also have less employment rights (with regards to, for instance, minimum income, unemployment benefits, sick leave, and holiday pay). Indeed, gig work is associated with a higher degree of informality.[4] With less employment rights, drivers lack adequate protections, and are therefore more vulnerable. This section gives an overview of the risks that Uber and Ola drivers are being exposed to during the COVID-19 crisis.
Drivers work on demand and get paid only when rides are booked and completed. Since India discovered its first coronavirus case on 30 January, offices, shops, restaurants, hotels and other venues started to close and the public became increasingly wary of venturing out, bringing down the demand for transportation. The earnings of drivers, who mostly depend on their jobs as their primary source of income, plummeted. Beginning on 25 March, a nationwide lockdown was imposed and services of ride-haling companies like Uber and Ola were prohibited.
During the lockdown, whose repeated extensions lasted until June, some cities and states allowed Ola and Uber to restart limited services to procure essential commodities and provide rides for medical emergencies. For instance, Uber partnered with the online grocery store Big Basket and e-commerce firm Flipkart for the delivery of essential goods, whereas Ola agreed to give 500 vehicles to the government of Karnataka for transporting doctors and for other coronavirus-related activities.[5] Nevertheless, the demand for transportation – be it for people or goods— continued to be low. During the lockdown months, Ola experienced a decline in revenue by 95 percent, while Uber had a 80-percent year-on-year decline in its global business in April.[6] As the country attempts to open up gradually, the demand for transportation remains low, as continued work from home is encouraged and rising infection numbers prevent people from making unnecessary trips outside their homes. As a consequence, drivers have lost substantial amounts of their income; with neither regular or minimum income, nor access to unemployment benefits, drivers have little else to fall back on and therefore face severe financial difficulties.
Some drivers own the vehicles that they use to provide the taxi services, while others have purchased the cars on finance and pay the amount in installments over a certain period. Another option for drivers is to lease or rent a car, which means they have to pay regular loans and rents to whoever owns the car, which can be a third party or the ride-hailing company itself. For instance, in cooperation with financing partners and car manufacturers, Ola has a cab-leasing program where cabs are bought and lent to drivers.[7] With the current drop in demand and therefore of income, drivers face further financial distress from not being able to pay their financial obligations from financing, leasing or renting the cars, which they need to perform their jobs.
Drivers are exposed to the risk of getting infected with the highly contagious coronavirus. Passengers are potential carriers and a transmission could occur during or after the ride, when they interact and exchange cash, or through touching of contaminated surfaces (e.g. door handles, buttons). The health risk is particularly high for older drivers and those with pre-existing health conditions. In addition, drivers who facilitate medical emergencies or deliver essential goods are also at high risk, because they might have to hand over purchased goods to people who are home-quarantined with COVID-19, or drive infected people to a hospital.
In case drivers start to feel unwell or fall sick, they are unlikely to seek medical help, as they typically have neither health insurance, which would cover the cost of treatment, nor are they entitled to sick leave. Therefore, drivers face a dangerous trade-off between the risks to their health and that of not being able to pay for food, rent and bills. Due to severe economic pressure, many drivers may be left with no option than to venture out on the roads and continue to drive as long as possible. Thereby, infected drivers would not only risk their own health, but also endanger their passengers and the people, who they live with or care for.
Responses of Ride-Hailing Companies
Before the pandemic, the business models of Uber and Ola were already the subject of a controversial debate. That debate has been highlighted by COVID-19: the pandemic has lifted the veil on the dark sides of informal work, with its inadequate employment rights and insufficient social protections. The risks are no longer theoretical, but have turned into a grim reality that threatens the livelihoods of an entire workforce. Both Uber and Ola have responded with a series of initiatives to (1) prevent infections among drivers and passengers; (2) handle suspected and actual infections; (3) cover medical COVID-19-related expenses; and (4) provide financial support to drivers. This section gives an overview of these measures.
Both Uber and Ola are making efforts to protect their drivers and passengers from a SARS-CoV-2 infection, which causes COVID-19.[8] They have developed health advisories to educate drivers and create awareness of the threats due to the virus. Safety-related information material is provided in walk-in centres across cities or in the in-app resource center. Further, drivers are reminded to frequently use hand sanitisers, wear face masks, and clean their vehicles. Partly, Ola and Uber are procuring and supplying drivers with precautionary materials such as sanitisers, face masks, and disinfectants. In addition, passengers are requested to use sanitisers, wash hands, and practice coughing and sneezing etiquette.
Both companies have developed guidelines which specify the course of action in case of suspected or confirmed cases of infection among both their drivers and the riders. Ola has set up a 24×7 helpline, which drivers and passengers are supposed to immediately contact, if they display symptoms or have been tested positive for the virus.[9] Drivers with symptoms are strictly advised to self-quarantine. If a driver displays symptoms or is tested and is found to be positive, Ola promises to reach out to previous customers as well as concerned authorities. Similarly, Uber orders drivers, who display symptoms or have been tested positively, to self-isolate, and temporarily suspends their accounts.[10] Further, both companies have partnerships with telemedicine providers (such as Mfine and DocsApp).[11] By allowing drivers to avail free online doctor consultations, this provision can be helpful in identifying sick drivers.
Ola and Uber announced insurance policies for their drivers who are infected or quarantined because they are suspected to be an active COVID-19 case or have pre-existing health conditions. At Ola, eligible drivers can claim a financial compensation of up to INR 30,000, which covers INR 1,000 per day for a maximum of 21 days and will include expenses for hospital and home quarantine.[12] Uber’s policy is focused on drivers who are still actively driving.[13] Eligible drivers can apply for financial assistance through their website and claim compensation for up to 14 days to cover COVID-19 and other illnesses that require hospitalisation. Several articles about this insurance policy have been reviewed, but none mentioned its coverage.[14]
Both companies acknowledge that drivers have lost substantial amounts of their income and need immediate cash support. Ola, through its Ola Foundation, has initiated a so-called “Drive the Driver” fund, which focuses on emergency support and essential supplies. The target volume is INR 500 million whereas the company wants to contribute the initial capital of INR 200 million, with the remaining amount to be secured through crowdfunding.[15] Similarly, Uber has announced the setting up of its “Uber Care Driver Fund“ (in partnership with an online donation platform and a social enterprise) to give grants to drivers to help meet their and their family’s immediate needs. Uber has already deposited an initial INR 250 million, and is partnering with a crowdfunding organisation to raise the other half and take the total amount to INR 500 million.[16]
Furthermore, to address liquidity needs, Ola offers interest-free micro-credits of up to INR 3,600 per week, which are disbursed in parts of INR 1,2000 over the course of three weeks.[17] Uber has a micro-loan offering in place since 2018, which allows drivers to access microloans within a range of INR 5,000 and INR 25,000 at a monthly interest rate of two percent.[18] In addition, both companies are seeking help from the government. Ola appealed to the government to get a six-month delay in tax payments to make up for lost income, and in order to allow a twelve-month waiver for vehicle loans and rentals.[19] In its home market, Uber has called on US President Donald Trump to include drivers in the country’s planned US$ 1-trillion COVID-19 stimulus package.[20] In addition, the company website refers drivers to resources, which help them request financial assistance available from many governments.
Evaluation of Responses
Ride-hailing companies fear that as their drivers are vulnerable to getting infected and could contribute to the spread of the virus, which will cause the public to view their services as unsafe and thereby negatively impact their future corporate development. Therefore, Ola and Uber have responded with initiatives to prevent infections among drivers and passengers, handle suspected and actual infections, cover medical COVID-19-related expenses, and provide financial support to drivers. This section evaluates these measures that have been introduced by ride-hailing companies in response to the pandemic.
The focus of precautionary measures is to educate drivers and encourage the use of sanitisers, disinfectants and masks. These efforts came late and only after safety concerns have been raised in the media and the Indian Federation of App-based Transport Workers (IFAT) requested the distribution of health advisories and protective material to their drivers.[21] Nevertheless, journalists found that the reality on the ground is that many drivers are still unaware of risks and best practices for mitigation, are not wearing masks nor using sanitisers, and vehicles did not appear sanitised.[22] In Hyderabad, drivers have initiated protests for safety kits, as companies have failed to provide them despite repeated appeals.[23] Moreover, the measures can only help improve hygiene, while effective protection against infection remains limited due to the nature of the travel mode: driver and passengers sit in close proximity of each other and cannot practice social distancing.
Guidelines specify that drivers and passengers who show symptoms should self-report and report each other, and that drivers with symptoms or a COVID-19 diagnosis, should stay in quarantine. However, companies have no effective mechanism to enforce these guidelines and monitor compliance, and rather depend on the self-responsibility of drivers and passengers to inform Ola and Uber. However, given that many drivers cannot afford losing their income, they have a strong incentive to hide symptoms and continue to work. In addition, when drivers apply for financial assistance, Uber puts their accounts temporarily on hold, assuming they could pose a risk to passengers. This threat of account deactivation could further weaken the willingness of drivers to self-report. The partnerships with telemedicine providers could help diagnose and identify infected drivers. However, it is unclear whether independent medical consultations are provided and protection of sensitive health data is guaranteed, given that Ola and Uber have a strong interest to know the health status of drivers.
Ola and Uber have introduced insurance policies for COVID-19-positive and quarantined drivers. Eligible drivers receive assistance for up to 14 days (Uber), or a maximum of 21 days (Ola), but it is unclear under which conditions drivers are granted the maximum amount of days. In the case of Ola, a news website mentioned on 5 May that the company has covered the medical expenses of 17,000 drivers, which is less than one percent of its drivers.[24] Moreover, it is questionable whether the maximum amount of INR 30,000 would be sufficient to fully cover costs of medical treatment, especially in case drivers would require intensive care. Uber has updated its policy and now focuses its assistance on drivers who are still actively driving during the crisis. It is questionable how many drivers do so during a lockdown situation, though it would be safe to assume that there will be rather few. No numbers were found on how many drivers got their medical expenses covered. However, journalists spoke to drivers, who perceived the policy as narrowly defined and restrictive, and many claims have been denied.[25]
Ola and Uber have set up funds through which they aim to provide financial relief packages to help drivers cover their essential needs. Both companies have endowed their funds with some initial capital (Uber: INR 250 million, Ola: INR 200 million), but seek to raise further capital through crowdfunding to reach target values of INR 500 million. Employees, CSR funds and citizens are requested to contribute to the fund. The crowdfunding campaigns are donation-based, i.e. donors are provided with a tax receipt to claim tax rebate, but unlike with other types of crowdfunding they do not receive financial returns or non-monetary rewards. As of 11 June, the crowdfunding campaign for the Uber Care Driver Fund stood at nearly INR 320 million, and 75,000 drivers have received one-time cash grants of INR 3,000 from it.[26] While Uber said the aim is to make the amount sufficient to take care of the needs of a family of five for few weeks, the company has not shared the concrete amount of the grants transferred to drivers.[27]
On the same day, the Ola crowdfunding campaign stood at nearly INR 260 million.[28] Ola’s relief package does not include any monetary compensation, but food supplies have been provided to 40,000 drivers through the fund (i.e. which is two percent of Ola’s estimated two million drivers in India) and distributed about 650,000 kg of essential supplies.[29] Journalists have reached out to both companies to seek more clarity on the details of the disbursed funds (not only the amounts disbursed, but also the frequency and process of disbursals), but both companies declined to answer specific questions about the utilisation of the funds.[30] This raises questions about transparency. A journalist, however, found that in Bengaluru, a few thousands drivers have received cash assistance ranging from INR 500-700.[31] Since the crowdfunding process is still ongoing, it is not sure whether and when the funds will reach their target amounts of INR 500 million. Accordingly, it is uncertain whether sufficient capital will be available in the short term so that drivers do not need to wait a long time to receive at least a minimum amount of assistance. However, even if drivers have received a one-time grant, it will help them cover essential needs only for few weeks, as additional grants are conditional on further fundraising.
Ola and Uber offer micro-credit schemes, which can provide some short-term relief during the crisis. However, the credit will have to be paid back later or set off against earnings on the platform after return to normal business. Therefore, micro-credits might just shift financial problems into the future and deepen drivers’ financial dependencies. Furthermore, both companies appealed to, or referred drivers to apply for financial support from the government. This creates the impression that ride-hailing companies want to shift responsibility to the government to provide support for their drivers.
Conclusion
The use of the term “independent contractors” to refer to the status of gig workers, implies that they lack employment rights, and thereby basic protection against risks associated with their work. Indeed, the COVID-19 crisis has only highlighted the risks of informal work, in general, which are being mirrored in gig work. In the ride-hailing sector, drivers have lost substantial amounts of their incomes, which implies that many of them are struggling to cover essential needs, let alone pay financial obligations from financing, leasing or renting the cars that they use for their gigs. Further, drivers are exposed to a risk of infection with the SARS-CoV-2, and if they do get infected, they face financial pressure to continue to work, and might end up endangering themselves and their passengers and contributing to the spread of the virus.
Uber and Ola have responded with several measures, and this analysis has led to four conclusions. First, precautionary measures being promoted by both companies among their drivers are often not followed and can, at best, improve hygiene, but not effectively protect against infection. Second, there is no effective mechanism to identify COVID-19-positive drivers and one can expect that many of them continue to work, rather than to self-report and stay in quarantine. Third, both companies announced policies to cover COVID-19-related medical expenses, but few drivers have benefited from such, and it is unclear whether actual paid amounts are sufficient to fully cover cost of medical treatment. Fourth, the ride-hailing companies have set up funds, from which grants for emergency support should be distributed, and endowed them with an aggregate amount of INR 450 million, which is a drop in the bucket when compared to the number of drivers. Overall, these results suggest that COVID-19-related measures are more appearance than substance, and provide neither sufficient health protection nor adequate financial support.
The first priority for policy responses must be to ensure that they cover the basic and immediate needs of drivers. This can include access to food and rations distributions and/or income support. As drivers of ride-hailing companies are capable of using digital technologies, it is possible to process applications for temporary income support online, and deliver transfers through digital payments.[32] Moreover, ride-hailing companies should share more data on provided assistance, which would help to identify drivers that are still in need, and to deliver support in a targeted manner.
In the pre-COVID-19 time, criticism of the informal nature of gig work was often countered with the argument that this type of work offers flexibility and gives workers “freedom” to self-determine working hours and location. The argument was widespread, despite the fact that most gig workers actually prefer traditional employee-employer relationships and value job security more than any other work attribute.[33]
The situation caused by the pandemic finally confirms that flexibility is a luxury feature of work in times of stability. It can be a facet of self-realisation at work for some privileged few, but the argument is not applicable to huge populations of workers who turn to gig work because they have little else in terms of options. The current scenario, in which livelihoods and health of an entire workforce are threatened, proves that flexibility cannot come at the cost of most basic protections. All workers – irrespective of their unemployment arrangements – need to be able to access health care, to choose to stay home when unwell, and benefit from income support in case of a crisis-related reduction of working time or job loss.[34] In that sense, the COVID-19 crisis must be understood as a wake-up call to reconsider social protection mechanisms for gig workers and challenge their status as “independent contractors”.
(The author thanks two anonymous reviewers for their valuable feedback, and Vinia Datinguinoo Mukherjee for her excellent editing.)
About the Author
Sabrina Korreck is a Senior Fellow at ORF.
Endnotes
[1] Sandeep Soni, “Uber’s profit up 63% in India even as expenses grew higher“, Financial Express, December 31, 2019.
[2] Shubham Agarwal, “Uber Ola offer lockdown charity to few drivers, most want proper safety nets”, HuffingtonPost, May 9, 2020. The article cites that Ola has estimated 2 million drivers in India, while Uber does not disclose how many drivers are on its platform in India, but claimed to have garnered more than 50% of India’s ride-hailing market – implying that the company has at least as many drivers as Ola.
[3] ILO, “Non-standard employment around the world: Understanding challenges, shaping prospects”, 2016.
[4] See Urvashi Aneja, “Informal will be the new normal in the future of work”, The Wire, June 19, 2018; Sabrina Korreck, “The future of work: Embracing informality”, Observer Research Foundation, January 27, 2020.
[5] The Economic Times, “Ola Cabs gives 500 vehicles to transport doctors and for coronavirus-related activities”, March 30, 2020; Manish Singh, “Uber partners with Flipkart and BigBasket in India to deliver essential items”, TechCrunch, April 6, 2020.
[6] Surajeet Das Gupta, “Uber lays off a quarter of its India workforce amid Covid-19 crisis”, The Wire, May 26, 2020.; Times of India, “Ola to layoff 1,400 staff as Covid-19 pandemic hits revenues”, May 20, 2020.
[7] Dhanya Ann Thoppil, Mihir Dalal, “Ola starts buying cabs, lending them to new drivers”, Livemint, September 15, 2015.
[8] The Economic Times, “Taking a cab? Uber, Ola issue safety guidelines to tackle coronavirus”, March 17, 2020.
[9] Ibid.
[10] Ibid.
[11] The Economic Times, “Ola offers coverage of up to Rs 30,000 coronavirus affected driver-partners”, March 31, 2020.; The Economic Times, “Uber to offer subsidised healthcare for drivers, delivery staff”, October 15, 2019.
[12] Ankita Chakravarti, “Coronavirus in India: Ola to offer financial aid to COVID-19 affected driver-partners”, India Today, March 23, 2020.
[13] Uber, “An update on COVID-19 financial assistance“, April 10, 2020.
[14] See, for instance: The Hindu Business Line, “Covid-19: Uber India assures financial assistance to drivers tested positive”, March 22, 2020.
[15] Business Today, “Coronavirus: Bhavish Agarwal-led Ola to donate Rs 20 crore for drivers affected by lockdown”, March 28, 2020.
[16] The Hindu, “Uber bid to set up fund to help driver-partners“, April 9, 2020.
[17] Ajeet Mahale, “Ola to provide interest-free loans to drivers for three weeks in face of COVID-19 lockdown”, The Hindu, March 31, 2020.
[18] Uber, “Uber introduces Uber Care for its driver partner community in India”, November 25, 2018.
[19] Aditi Shah, “Coronavirus impact: Ola seeks bailout for drivers, taxi firms in India”, Livemint, March 25, 2020.
[20] Supantha Mukherjee, Tina Bellon, “Uber urges White House to include gig workers in coronavirus stimulus”, Reuters, March 23, 2020.
[21] Aman Rawat, “Ola, Uber risk public safety with no advisory for drivers on coronavirus”, Inc42, March 8, 2020; KV Kurmanath, “Covid-19 threat: IFAT calls for protection of Ola, Uber drivers”, The Hindu Business Line, March 14, 2020.
[22] Ankita Chakravarti, “Covid-19: Ola and Uber may not be safe as drivers have no masks or sanitisers, companies say measures taken”, India Today, March 18, 2020.
[23] The Times of India, “Hyderabad cabbies protest for safety kits”, June 6, 2020.
[24] Shubham Agarwal, “Uber Ola offer lockdown charity to few drivers, most want proper safety nets”, HuffingtonPost, May 9, 2020.
[25] Tyler Sonnemaker, “‘In order to make a living I must put myself and my community in danger’: Uber drivers say the company’s inconsistent sick pay policy is pushing them to keep working – even if they get sick”, Business Insider India, April 8, 2020.
[26] Milaap, “The Uber Care Driver Fund”, June 11, 2020, Shubham Agarwal, “Uber Ola offer lockdown charity to few drivers, most want proper safety nets”, HuffingtonPost, May 9, 2020.
[27] The Hindu, “Uber bid to set up fund to help driver-partners“, April 9, 2020.
[28] Ola Foundation, June 11, 2020.
[29] Shubham Agarwal, “Uber Ola offer lockdown charity to few drivers, most want proper safety nets”, HuffingtonPost, May 9, 2020.
[30] Kritti Bhalla, “Where’s the relief fund, beleaguered cab drivers ask Ola, Uber”, Inc42, April 18, 2020.
[31] Arpita Raj, “Scare work, irregular earnings: drivers, delivery agents struggle”, The Quint, May 12, 2020.
[32] International Monetary Fund (IMF), “World Economic Outlook: Chapter 1, The great lockdown“, April 6, 2020.
[33] Nikhil Datta, “Is it time up for the gig economy?” World Economic Forum, July 22, 2019.
[34] Janine Berg, “Precarious workers pushed to the edge by COVID-19”, ILO Blog, March 20, 2020.
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Dr. Sabrina Korreck was a Senior Fellow at Observer Research Foundation. Her research focuses on the digital economy and she tracks developments in startup ecosystems ...
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