Is Uber Helping India’s Poor Or Putting Its Drivers In Debt?

Is Uber Helping India’s Poor Or Putting Its Drivers In Debt?

In the United States and other Western nations, the gig economy often comes under fire for being a drain on full-time employment, an inherently untrustworthy way of doing business, an unfair invasive species preying on cabbies and other full-time industry workers, and so on. Of course, plenty of part-time chauffeurs, blue-collar workers, and delivery drivers love the ability to make some money on the side or full-time, and the business owners who deploy these gig workers make a pretty penny.

Still, many harp on the negatives of the gig economy – lack of benefits, little job security, no insurance, a dearth of career advancement opportunities, often high overhead costs; the list goes on. Studies have shown an undeniable rise in gig economy workers – at least 68 million of them fill various roles – but satisfaction in these jobs still depends greatly on whether freelance employment is a choice or route of necessity. Forbes estimates that, by 2020, as many as 43% of the workforce could be employed on a part-time, gig basis.

The negatives associated with the gig economy are balanced out, for many who do it by choice, by immense positive that simply cannot be derived from a full-time gig. Career independence, flexible hours, and the ability to work a variety of jobs gaining diverse experiences are just a few factors that have attracted workers – primarily millennials – to the gig economy. The benefits of the gig economy are more easily seen in developing nations where full-time employment is often a rarity, and gig jobs represent the opportunity for steady, well-paying employment for those who would typically know no such thing.

One must only consider the annual incomes in nations such as Bangladesh, Haiti, and even the likes of India – some of the poorest nations per capita in the world – to understand why a “meager” gig economy salary by Western standards, or anything close to it, would represent a windfall to those in nations where any form of steadily-paying employment is difficult to come by. The gross income of Haiti, per capita, is $820 per year, and the Caribbean country is only 21st on the list. African nations Malawi and Burundi have GNIs below $300, while nations 1 through 18 on the list – primarily African but also including Afghanistan – average less than $700 in yearly earnings per person.

Many of these nations aren’t effective test cases for the gig economy. The relative lack of development and consumers and drivers able to pay for the overhead and services that would be required by a gig economy mean they have a ways to go before being viable sites for gig economy implementation. However, one test nation – considered to be on the precipice of development but still experiencing rampant, widespread poverty – has proven the value of gig employment in the non-developed world: India.

With an average annual per capita income of $1,670 per year, India is far from a wealthy nation. However, their large population and variance of economic classes has allowed for the gig economy to flourish – at least, depending on who you ask. In the rosier picture, gig jobs have resulted in a new class of jobs for those who badly need them. According to Uber, drivers in India typically earn between $5,000 and $12,000 per year, placing them solidly in the top 10% of earners.

Proponents of the gig economy in India paint a pretty picture of social elevation through gig work.

‘…it is still fair to say that many of its drivers qualify as upper middle class. They enjoy an air-conditioned cocoon for an office while most blue-collar workers toil in the heat and dust of a farm or street. Such status stands in sharp contrast to the fate of an average New York City Uber driver, who is likely struggling to pay rent,’ writes Foreign Policy managing editor Ravi Agrawal.

The promises of gig employment in developing nations haven’t always lived up to expectations, however. This year, a contingent of Uber drivers – apparently promised the equivalent of $1,500 per month in potential wages – went on strike because, in their view, ride sharing services Uber and Ola take far too great a share of what is already a measly wage.

“We are not able to meet our needs from Ola and Uber,” driver Tanveer Pasha told Quartz. Pasha said he makes about $10 a day, and nearly all of that money goes to repaying car loans. “I can't live on the remaining Rs200 [$3] and run a family,” he said.

Companies have pointed to the challenges of maintaining a driving force remotely in nations like India as the reason their cut is so significant.

“Throughout the country, the roads tend to be terrible; clogged with traffic, potholes and pedestrians, marked by ever-shifting routes and a freewheeling interpretation of automotive rules that is almost balletic in its lawlessness,” the Times explained. “India’s cellular networks can be spotty and slow, and banking, credit cards and other financial mainstays cannot be taken for granted. ... Not only are many of Uber’s drivers here unfamiliar with smartphones, some are illiterate. Often, drivers and riders don’t speak the same language.” (WaPo)

Large, rising cuts going back to the company is a complaint that American drivers could have warned Indian drivers about. And, the relatively low wages in developing nations means that the wages, for many, haven’t justified the investment in car maintenance and repairs.

Still, the relative value of a gig job, primarily driving, in developing nations depends on one’s scenario. Those who had a relatively stable source of income and sold their farm or quit their job to drive on a full-time basis are probably not seeing near the returns they expected. But for those whose options for employment were relatively meager – which is the case for a large majority of people in the developing world – even low-end estimates of gig-derived wages could represent a significant improvement.

As is the case in developed nations, those who turn to the gig economy often do not have an alternative. And, while wages could and perhaps should be more skewed toward the person delivering the services, some employment is always better than no employment. In a developing world where jobs are even more scarce and social safety nets less effective, if they exist at all, the value of the gig economy to provide some level of income has a disproportionately positive impact.

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