The impact of coronavirus on ride-hailing services: A story of narrowed livelihoods

For years, Salah* earned a relatively stable income working as a driver for the ride-hailing companies Uber and Careem. But after the coronavirus pandemic spread to Egypt, and the ensuing slowdown in daily transportation compounded by a government-imposed nighttime curfew, he now finds himself spending long hours driving around in vain looking for passengers only to return home to his wife and son empty-handed. “I have to leave this job,” he says.

A young man in his twenties, Salah was earning nearly LE2,000 per month after expenses working as a driver for Uber and Careem. But with the advent of the coronavirus, he now spends nearly half of his days awaiting phone notifications from the ride-hailing apps for a potential customer, to no avail. His days now usually end with his gas tank, along with his hopes, depleted.

To further complicate matters, Salah does not own the car he drives. He rents it from his cousin for LE5,000 per month, which he is obliged to pay regardless of how much he earns from driving. The situation has resulted in him occasionally having to borrow money to make ends meet.

Drivers working in the ride-hailing gig economy in Egypt have widely varying socio-economic circumstances and standards of living, and the coronavirus outbreak has impacted them in different ways. Yet they have all indisputably suffered a severe reduction in their incomes as a result of the pandemic, forcing many to consider abandoning this line of work and make adjustments to a lifestyle they have grown accustomed to over the past several years.

Despite the fact that Salah has to pay LE5,000 a month, he nevertheless has the option to quickly end the rental payments and find another job. By contrast, other drivers saddled with car loans or installment payments find themselves in a more difficult position.

Abdallah*, another driver, says he will not be able to pay his latest car payment that is due in a matter of days. To make matters worse, since he bought his car from a dealership and is paying it off in installments — as opposed to a bank loan — he will also not benefit from a recent Central Bank decision that requires banks to postpone loan payments for individuals and corporations for six months, including consumer loans such as personal loans, credit cards and car loans.  

Meanwhile, another driver, Sameh*, took out a bank loan to buy his car and could benefit from the Central Bank decision. However, with two children in school, his running expenses nevertheless put him in a precarious financial situation with the loss of income from driving brought on by the pandemic.

The ride-hailing crisis began as coronavirus cases in Egypt grew last month. Social distancing measures have been accompanied by an overall reduction in movement, and drivers like Abdallah, Salah, and Sameh now find themselves driving aimlessly through the streets for hours without finding any customers. The situation was exacerbated when the government announced a daily 7 pm to 6 am curfew that began on March 25 that has severely reduced working hours for drivers.

Abdallah used to make an average of LE250 per day from driving before the coronavirus outbreak. Now that’s all changed. He says he recently spent seven hours roaming the streets without finding a single customer before giving up and returning home. 

Sameh tells a similar story. He recently returned home in the middle of the day — around 1 pm — after completing just one trip instead of the average eight trips he would get over the same period before the pandemic. He now constantly worries about fuel expenditure, but he still goes out every day to try his luck.

The ride-hailing companies themselves are trying to find ways to overcome the transportation market slowdown. According to a source familiar with the ride-hailing market, Careem — which is now owned by Uber — is looking to revive revenues by acting as a courier service, transferring personal items for people; and as a home delivery service for retail stores and restaurants, a widely expanding market amid efforts to reduce public gatherings.

“The company aims to use its existing driver-partners for the new service,” the source, who spoke to Mada Masr on condition of anonymity, says. “However, not all drivers can be incorporated into this service because it pertains to personal possessions and goods that might be valuable. So the company has settled on using drivers with excellent customer ratings for the new service, especially when it comes to financial transactions. I don’t think this new plan will resolve the crisis for all drivers.”

Nevertheless, by all accounts, the pandemic has dealt a heavy blow to an industry that provided an appealing source of income for people like Salah, Abdallah and Sameh. 

“All of Egypt obtained cars and started working,” Salah says. The decision to begin working as a driver for a ride-hailing service allowed Salah to gain autonomy from his father, a wealthy fruit and vegetable trader in 6th October City, with whom he quarreled three years ago. But now that he is no longer able to sustain a living from driving, he will most likely return to work with him.

Meanwhile, Abdallah left an administrative position that paid him LE4,000 per month three years ago for the prospect of earning an independent income through self-employment. He bought a car on installment and began working as an Uber driver, earning between LE7,000 and LE7,500 per month. Now, in the midst of the pandemic, he is now unable to afford his LE3,600 monthly car payments.

In Salah’s case, working as a Careem driver helped him avoid unemployment. He used to work as an administrative manager at an import-export company but the business went under following the devaluation of the Egyptian pound in 2016; earning money from driving provided a lifeline.

The arrival of ride-hailing services Uber and Careem in Egypt also opened up the job market for drivers to higher-income segments of society, according to Abdel Rahman Hegazy, a researcher with Transport for Cairo. Hegazy says that the new transportation model allowed university graduates and students to use personal or family cars to generate monthly income by working part-time.

In the2017 study “A Glimpse into the Sharing Economy: An Analysis of Uber Driver-Partners in Egypt” by Nagla Rizk, a professor of economics and the founding director of the Access to Knowledge for Development Center at the American University in Cairo’s School of Business, 51.5 percent of the surveyed Uber drivers had college degrees. The study found that working with Uber provided drivers the opportunity to manage their time and income according to their personal needs.

Responses by drivers to the study’s questionnaire revealed that the two primary reasons for joining Uber were earning a better income and working with a reputable company, followed by the incentives of flexible hours and self-employment.

But along with the positive impact on the job market, the fragile nature of the gig economy — which provides little access to secure employment or benefits — has been clearly manifested during the coronavirus pandemic and its impact on the economy.

The rapid and wide expansion of jobs for drivers led to a bubble of sorts in ride-hailing transportation, with a massive influx of drivers that saturated the market, Hegazy says. “This coincided with Uber’s takeover of Careem, which ended competition between the two companies over market share,” Hegazy says. “Therefore, benefits awarded to drivers were reduced, especially in the absence of any collective representation or associations for drivers.”

The cutback in benefits was felt by drivers well before the coronavirus outbreak. Salah says his income clearly decreased “because Uber and Careem gradually reduced the benefits awarded to drivers, foremost among them the bonuses drivers were awarded based on the number of rides and their length … These benefits were cut back bit by bit until they no longer existed.”

The rules set by the Egyptian Competition Authority in December to regulate Uber’s takeover of Careem did not broach the topic of driver benefits and bonuses, which Salah says constituted as much as 25 to 30 percent of his average monthly income.

Yet the most significant factor impacting Uber and Careem drivers during the coronavirus outbreak is the inherently unstable and non-contractual nature of their relationship with the corporations they work for — a defining characteristic of the gig economy worldwide. 

Uber insists on defining itself as a technology company specialized in connecting riders with drivers, rather than a transportation company, which frees its relationship with drivers from legislative controls governing employer-worker relationships.

Over the years, the company has faced several lawsuits in European courts, including one in France. A French court ruled that the contract between Uber and the driver who filed the lawsuit was an employment contract and was therefore subject to requirements determined by regular employment laws. A British court also compelled Uber to pay its drivers minimum wage and give them regular weekly holidays. However, that is not the case in Egypt.

Hegazy says that the adoption of a law in mid-2018 regulating the road transportation of passengers using information technology — which regulated ride-hailing for the first time in Egypt — lacked any reference to a fixed employment relationship between drivers and companies. Such a relationship could have provided drivers a degree of protection for drivers during difficult periods like the coronavirus pandemic.

Nevertheless, Uber put out messages via text and through its app that it is committed to financially compensating drivers for any time spent in recovery as a result of contracting the coronavirus, according to Abdallah.

The source familiar with the ride-hailing market says that Careem promised the same as well. “The model of compensation is based on calculating a driver’s average daily income over the previous six month period awarding them equivalent compensation for 14 days,” the source says.

Uber also advised its drivers on how to combat infection by “reducing the number of maximum passengers from four to two, preventing them from sitting in the passenger seat next to the driver, disinfecting the car after each trip, and keeping the windows rolled down,” according to Abdallah.

Salah did not show interest in heeding such advice sent by Uber and Careem on combating infection even though he found the prospect of contracting the virus “horrific.” 

“What does it matter to me if I have to buy alcohol to [disinfect the car] if neither the company will pay me for disinfectants nor compensate me for the collapse of income after they made millions on the backs of drivers,” he says. “I know I can return to my son at the end of the day carrying infection and death, but at least I also return with food.”

*The names of drivers who spoke to Mada Masr have been changed for their safety.