If e-commerce firms have been able to evade regulatory requirements with regard to customer and state obligations, their employment practices have gone even further beneath the radar, taking advantage of weak trade union movements and even weaker regulatory apparatus of the country with regard to labour laws. In this regard, all that has attracted media attention is the large ‘packages’ that e-commerce companies, flush with funds, were providing till recently to graduates of elite colleges like IITs and IIMs. These firms had become star campus recruiters until the recent controversy when they reneged on some of their commitments.

Flipkart has close to 35,000 employees today, and yet their employment practices remain almost a black box. We get a peep into them only when there is a moment of rupture, as in July 2015, when more than 400 deliverymen employed by e-retail companies in Mumbai went on strike protesting lack of basic working rights. What was most revealing was the charter of their demands: ID cards, fixed duty hours, toilets in delivery offices, overtime allowances, bike maintenance allowance, food and laundry allowance, payment to foot delivery boys of Rs 5 for shipment and Rs 10 for return shipment, ESIC cards, uniforms, weekly holidays and ‘exemption from work’ on public holidays, and many more such elementary labour rights. The corporate response was on predictable lines: “Flipkart, offers the best salary and benefit structure comparable to others in the industry."⁷⁷ In spite of more than a decade of e-commerce, we are still debating⁷⁸ the law under which they should be held accountable: Factories Act (of course they will claim that they are not a ‘factory’ within the definition of this law) or the Shops and Commercial Establishment Act (in any case they have been claiming that they are not a shop!). Amazon even in the US does not seem to fare any better. A 2011 exposé⁷⁹ by Pennsylvania’s Morning Call newspaper chronicled the plight of Amazon warehouse employees in Breinigsville. According to the article, Amazon employees were forced to work in dangerous summertime heat conditions with temperatures as high as 110 degrees. In fact, so many workers ended up in the local hospital that an attending physician reported the case to federal workplace safety regulators. In the wake of these investigations, Amazon had to spend $52 million to install cooling systems in its warehouses. Last year a detailed New York Times piece,⁸⁰ based on interviews with more than a 100 Amazon workers, termed it as a ‘bruising workplace’ where working 80 hours a week was common place and employees breaking under work stress a common sight. Amazon employees were reported to be held accountable for a staggering array of metrics, a process that unfolded in what could be anxiety-provoking sessions called ‘business reviews’, held weekly or monthly among various teams. A day or two before the meetings, employees received printouts, sometimes up to 50 or 60 pages long. At the reviews, employees were cold-called and pop-quizzed on any one of those thousands of numbers. A woman who had breast cancer was told that she was put on a “performance improvement plan” – Amazon code for “you’re in danger of being fired” because “difficulties” in her “personal life” had interfered with fulfilling her work goals. There is a lot of media build-up about the kind of earnings that Uber/Ola drivers can make in spite of the low fares at which their services are available. This led to drivers joining their platforms in hordes – Ola is said to have about 400,000 drivers in India and Uber about half of that⁸¹

(many are registered on both). But a close examination of even cursory reports suggests that a lot of this is nothing more than mere hype, or appear unsustainable over time, quite like the low prices of merchandise on Amazon/ Flipkart.

Even a perfunctory analysis of the rates of different taxi services suggests that the monthly income of Uber/Ola drivers depends heavily on incentives for completion of a certain number of trips per day, which is a highly volatile component. In a small study Bishnoi⁸²

found that the income that a driver would earn with incentives does confirm reports of drivers earning a reasonable amount of Rs 35,000 to Rs 60,000 per month, but shorn of incentives it can drastically come down to anywhere from Rs 15,000 to Rs 20,000. It is important to note that these earnings are without any kind of further benefits: health, insurance, etc. Now as these apps draw large numbers of drivers into their fold, they are sharply cutting down on both incentives as well as rates. That is why there are regular reports of driver protests against Uber/Ola demanding that they live up to their promises.

For instance, a recent report from Hyderabad regarding protesting app drivers described a driver who had bought a car on loan in anticipation of promised handsome returns, but ended up with not more than Rs. 5000 a month after paying for the loan and other expenses.⁸³ Another driver is quoted as saying, “Some of us have sold gold and took loans to buy cabs. Some others quit their driving jobs to become owners in one or both the networks. Uber had projected a monthly income of Rs. 60,000-70,000 a month”. The agitating drivers released a list of demands that included accidental and health insurance for drivers and their families, besides better incentives and rates. In a more recent report,⁸⁴

another driver complains that he barely made Rs 600-700 per day, “less than a fifth of what he was earning earlier” (with Uber/ Ola).This has resulted in his two daughters abandoning school and taking up menial jobs. He adds, “It is time for all hands to hit the deck -- the car’s EMI of Rs 13,900 a month is the first mouth to feed.” Some drivers are reported to be driving through the night till early morning to maintain their living standards.

It has been widely reported that Uber/Ola drivers can earn even better then qualified professionals. However, several reports are contradicting this now. A report⁸⁵

filed from Bengaluru on a planned protest by 20,000 app-based drivers in September 2015 narrates the story of one Manjunath. He resigned as an operations manager in a transportation and logistics company two months earlier and joined Uber after seeing an advertisement that said he could earn up to Rs 90,000 a month. But the reality turned out to be very different. In his own words: "I bought a new car and have to repay the loan, but the company blocks the mobile phone for a week if a consumer complains. They promise to pay incentives of Rs 100 per trip but if we do not complete the target of 13 trips a day, we get nothing". Similar reports can be found worldwide too.

A report⁸⁶ from San Francisco, the birthplace of app-based taxi services, stated that though Uber often repeated the claim that its drivers could make a median of $74,000 a year, numerous reports indicated that this figure was rosy at best, wilfully misleading at worst. It further added that even cursory arithmetic based on numbers from Uber’s blog revealed that to make that much, drivers would need to complete 3.4 full rides an hour - or work a lot more than 40 hours per week. Further, the $74,000-a-year figure is gross pay, which does not account for the cost of gas, car maintenance, and the like. “You get in the habit of not identifying yourself as an Uber employee when you’re a passenger (in an Uber taxi), that’s for sure,” a former corporate staffer is reported to have confessed, and he further adds, “A lot of people say they work at another company in the building when getting picked up or dropped off at (Uber) HQ.” The company claimed that the median UberX driver in New York City earned over $90,000 a year in 2015. But blogger and entrepreneur Justin Singer revealed this number to be highly misleading. Breaking down average traffic speed, rates and the number of trips, Singer found that drivers in the city netted around $50,000 per year, provided they worked seventy hours a week. The income level and hours are similar to what a standard taxi driver would enjoy⁸⁷

A more fundamental debate with regard to app drivers is whether they are independent drivers – contractors/entrepreneurs as Uber/ Ola would like to term them, or ‘employees’ of the app-based service providers. Uber points to its drivers’ abilities to set their own schedules as evidence that they operate independently and should not be considered traditional employees. Drivers, on the other hand, argue that Uber sets strict standards for how many rides they need to accept while on the road, and how they ought to interact with passengers -  and reserves the right to deactivate their accounts (basically, the equivalent of firing) if they do not comply. This has resulted in several lawsuits worldwide. The basic claim of drivers is that since Uber is able to control the prices, control the work conditions, track drivers, fire them for non-performance, etc. they are no longer intermediaries but employees. Also, Uber drivers provide a basic service to Uber without which it would not be a viable business. It is due to these reasons that in multiple cases Uber drivers have been granted the status of employees.⁸⁸

In June 2015 the California Labour Commission ruled that a driver for Uber in San Francisco was an employee of the company: “Defendants (Uber) hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation, the reality, however, is that Defendants are involved in every aspect of the operation” and asked the company to pay certain “unpaid expenses” to the driver. The report⁸⁹ termed this as “Uber’s worst nightmare” in case it had to pay such amounts to all of its drivers across California, US and globally! In March 2015 Uber drivers scored another victory when a federal judge in San Francisco ruled that they could move forward with a class-action lawsuit, potentially involving several thousand drivers, that sought to designate them as employees, not independent contractors⁹⁰

There are further issues with Uber’s contention that they are merely an app-based technology platform connecting riders and drivers. As critics have pointed out,⁹¹ “financing, owning, and managing a fleet of cars makes them identical to a taxi cab company.” Although its lease program is not mandatory, Uber has long connected drivers with car dealerships and lenders, in many cases pushing drivers with poor credit histories toward subprime loans. One of those lenders, Santander Consumer USA, was subpoenaed as part of a Justice Department investigation into subprime lending and last year had to pay $9.35 million in a settlement over illegally repossessing thousands of cars. Although Uber ended its relationship with Santander, it quickly launched a new program that matched those who could not get credit to lenders through a subsidiary, Xchange Leasing. The terms of these loans are typical of subprime borrowing. According to one driver, under Uber’s original leasing program, his payments totalled more than $1,000 per month with an interest rate of 22.75 percent. His driving became just a means to pay back the loan; saving money was out of the question (Uber deducts car payments directly from drivers’ pay checks). Uber drivers contend that, “They (Uber) have artfully shifted payment risk to drivers while withholding the most basic labour protections, including minimum wage, overtime pay, medical insurance and unemployment benefits.” Estimates put these costs at as high as $208.7 million a year in California alone.

It is nobody’s case that the old format taxi companies were paragons of virtue, but as Jon Liss concludes⁹²

“For all the convenience that Uber may offer its users, one of its primary by-products has been the degradation of working-class jobs that once generated a living wage….the trade-off for the relatively low pay was job security: stringent limits on who could pick up passengers and restrictions on the total number of cabs in a particular jurisdiction ensured drivers had enough work to make a living.” Uber has shattered this old deal. As (US) National Taxi Worker Alliance organizer Biju Mathew summed up, “It’s drivers and millionaires against the billionaires”.

Not all of these battles are being won by the billionaires. While the class action suit against Uber was scheduled to come up for hearing in June in San Francisco, Uber decided to go for an out-of-court settlement with the drivers in April this year and pay them $100 million to settle independent contractor misclassification claims in California and Massachusetts. But more importantly, Uber committed to make significant policy changes. Drivers would be permitted to place signs in their cars notifying customers that "tips are not included" and would be appreciated, Uber would recognise a driver association that can represent their issues, perhaps most importantly, it would forgo its practice of firing drivers without cause, and drivers would no longer be deactivated for a low rate of pickups. As Shannon Liss-Riordan, the attorney for the drivers summed up the battle,⁹³ the legal framework behind Uber and similar services

might be one of the sharpest attacks on workers we’ve seen in a long time… The rhetoric is, ‘But oh, this is good for the worker - be this on-demand worker, and you’ll have this freedom.’ But they are not their own bosses. Technology has created more extreme ways that employers can take advantage of workers. They are tethered to their phone. There are constant ratings, surge incentives, and data tracking their behaviour at times, with more pull than a human manager would have.

As the startups are getting mired in a crisis of their own making, the news of firings are becoming a regular feature. This includes many media favourites with large investments, such as TinyOwl, Housing.com, Zomato, InMobi, Snapdeal and now even Flipkart. In each case, several hundred are being retrenched at a time when employment is hard to come by. But layoffs are only one element of a greater malaise that is pushing a lot of startup workers to the brink. Doctors report that employees of startups, even in their 20s,complain increasingly of a number of physical and mental ailments, from simple flu and associated headache, to fluctuating blood pressure and sugar levels, skyrocketing cholesterol levels and, increasingly, cardiac ailments due to the work stress and constant pressure to ‘perform.’⁹⁴

In its desperation to be on the right side of these companies and their investors, the Indian government, in its recent Startup Action Plan, announced that such firms can self-certify their compliance with labour and environmental laws and there would be no inspection for three years in the case of labour laws.⁹⁵ Actually, such a ‘hiring and firing culture’ is lionised by proponents of the e-commerce. Anand Lunia, Founder of India Quotient, an investment fund for start-ups, had this to say:

If a start-up needs to be 10 times better than other government-run companies or large MNCs, they have to fire 10 times faster. Start-ups grow at such a rapid pace that there is no time for a half-yearly performance review and such. If any of my portfolio founders came up to me and said ‘Anand this guy is not performing, that guy is not performing, I don’t know what to do’ I would say, ‘Get lost. If you don’t have the guts to sack them, you are not a good founder’.⁹⁶

 

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Notes:

77. Akanksha Pahwa, “Flipkart’s Logistics Suffer Blow: 400 Delivery Boys Go On Strike Due To Lack Of Basic Amenities”, 30/7/2015, http://inc42.com/buzz/flipkart-delivery-boys-strike/ accessed on 20/06/2016. (back)

78. Somesh Jha, “Rajasthan brings e-tail under shops law”, 31/7/2015,
http://smartinvestor.business-standard.com/market/Marketnews-327171-Marketnewsdet-Rajasthan_brings_e_tail_under_shops_law.htm#.V2dw8DVyRds, accessed on 20/06/2016. (back)

79. Spencer Soper, “Inside Amazon's Warehouse”, Morning Call, 7/7/2015, http://www.mcall.com/news/local/amazon/mc-allentown-amazon-complaints-20110917-story.html accessed on 20/06/2016. (back)

80. Jodi Kantor& David Streitfeld, “Inside Amazon: Wrestling Big Ideas in a Bruising Workplace”, New York Times, 15/8/2015, http://www.nytimes.com/2015/08/16/technology/inside-amazon-wrestling-big-ideas-in-a-bruising-workplace.html?_r=0 accessed on 20/06/2016. (back)

81. Sunny Sen, “Uber, Ola losing sheen in India as driver incomes fall”, Hindustan Times, 16/3/2016, http://www.hindustantimes.com/business/uber-ola-losing-sheen-in-india-as-driver-incomes-fall/story-CJIgMCZ4DdOnf6VBISZY9L.html, accessed on 20/06/2016. (back)

82. Vikrant Kumar Bishnoi, “Stakeholder Analysis of Cab Aggregator Business Model in India”, Special Studies MBA Report, IIT Kanpur, May 2016 (unpublished). (back)

83. K V Kurmanath, “Uber, Ola not honouring promises they made: Drivers”, Business Line, 14/11/2015, http://www.thehindubusinessline.com/news/national/uber-ola-not-honouring-promises-they-made-drivers/article7878160.ece, accessed on 20/06/2016. (back)

84. “Uber, Ola losing sheen... “, op. ci. (back)

85. “20,000 Bengaluru Uber drivers may go off roads today to demand perks”, Times of India, 24/9/2015, http://timesofindia.indiatimes.com/city/bengaluru/20000-Bengaluru-Uber-drivers-may-go-off-roads-today-to-demand-perks/articleshow/49082299.cms, accessed on 20/06/2016. (back)

86. Ellen Cushing, “The Smartest Bro in the Room”, SanFrancisco Magazine, 21/11/2014, http://www.modernluxury.com/san-francisco/story/the-smartest-bro-the-room accessed on 20/06/2016. (back)

87. Jon Liss, “Uber and the Taxi Industry’s Last Stand”, Nation, 27/1/2015, http://www.thenation.com/article/uber-and-taxi-industrys-last-stand/ accessed on 21/06/2016. (back)

88. http://uberlawsuit.com/, accessed on 21/06/2016. (back)

89. Alison Griswold, “A California Labor Ruling Just Said an Uber Driver Is an Employee. That’s Uber’s Worst Nightmare,” Slate, 17/6/2015, http://www.slate.com/blogs/moneybox/2015/06/17/uber_drivers_ruled_employees_by_california_labor_commission.html, accessed on 21/06/2016. (back)

90. Tracey Lien, “Uber drivers granted class-action status in legal battle”, Los Angeles Times, 1/9/2015, http://www.latimes.com/business/technology/la-fi-uber-class-action-20150902-story.html, accessed on 21/06/2016. (back)

91. Caroline Fredrickson, “It's Not Just Uber: Why the Taxi Industry Needs an Overhaul”, American Prospect, 14/9/2015, http://prospect.org/article/its-not-just-uber-why-taxi-industry-needs-overhaul, accessed on 21/06/2016. (back)

92. “Uber and the Taxi Industry’s Last Stand...”, op. cit. (back)

93. Diana Kapp, “Uber’s Worst Nightmare”, SanFrancisco Magazine, 18/5/2016, http://modernluxury.com/san-francisco/story/ubers-worst-nightmare, accessed on 21/06/2016. (back)

94. Rahul Sachitanand and Rajiv Singh, “Here’s why employees are no longer happy at startups”, Times of India, 12/6/2016, http://timesofindia.indiatimes.com/tech/tech-news/Heres-why-employees-are-no-longer-happy-at-startups/articleshow/52713332.cms accessed on 22/06/2016. (back)

95. "All you need to know about PM Modi’s historic Startup Action Plan”, 16/1/2016, http://yourstory.com/2016/01/startup-india-action-plan/accessed on 22/06/2016. (back)

96. Aparna Ghosh, “Why startups like TinyOwl are resorting to mass firing”, 8/9/2015, http://yourstory.com/2015/09/tinyowl-startup-firing/, accessed on 22/06/2016. (back)