Cheap taxi: unregulated market driving precariousness and gig work

One of Malta’s major entrepreneurs in the field of private transport says the government has to act fast to regulate new employment practices that are leading to more so-called ‘gig’ or ‘platform work’.

Matthew Bezzina, chief executive of taxi company eCabs, says employment practices in his industry are “a ticking time-bomb”, and that the State cannot repeat the mistake it made by delaying legislation.

Ride-hailing services like Bolt as well as eCabs are increasingly moving towards a platform model, where the company’s sole responsibility is that of providing the digital platform that connects drivers – who are self-employed to all intents and purposes – to customers.

At present eCabs takes on a mix of employed and self-employed drivers, the latter branded as ‘partner drivers’. “When it was against the law, we wouldn’t hire self-employed drivers,” Bezzina said, saying that it was only after the public service garage reform was put in place that eCabs started taking in self-employed drivers.

Bezzina said that if the company was able to hire self-employed drivers a few years ago, it would have been much more profitable. “It’s easier and you can grow quicker, but we resisted it because it was against the law,” he said. “Now that it’s become law, we’re offering it – only those who had been breaking the law enjoyed a competitive advantage of three years.”

While admitting that the platform work model is highly successful, Bezzina warns that allowing companies to rid themselves of all administrative and infrastructural costs associated with hiring employees, will only worsen the precariousness of the gig economy and hurt workers.

“I agree with the gig economy – it provides flexibility and contract work to those not willing to work a nine-to-five job, but we can’t let it grow beyond control and only try to fix it when it starts to hurt vulnerable people,” Bezzina said.

He acknowledged that an element of precariousness existed among taxi drivers, his company being no exception. “I’m not happy about it, I’m doing it, but I’m not breaking the law,” he said.

And current legislation simply hasn’t developed enough to safeguard self-employed workers, he noted. “This is like what happened in the building industry. You had major lacunas in the law and people were trying to enforce laws drawn up decades ago.”

Matthew Bezzina, eCabs CEO

But his tone turned angry as he spoke of competitors operating illegally in the market. “We spent three years operating on an employment model while others were operating illegally with a self-employed model, and the market rewarded the illegal model,” he said. Customers have become accustomed to a car arriving within two or three minutes, he said, explaining how his company even invested in real estate to be able to park vehicles and remain in compliance with the law.

“And the market penalised us for it, because that’s what the market wants. You can never fight the market,” he lamented.

Bezzina said that eCabs’s employment model effectively raises its consumer prices, at least when compared to competitor’s fares. “Of course, eCabs prices are more expensive, because we’re abiding by the law! Try and explain this to the average customer,” he said.

But when it comes to safeguarding gig workers and their employment rights, Bezzina suggested a “third way” approach, with gig drivers enjoying a certain degree of employment rights, but not to the same extent as employed drivers.

He said all ride-hailing platforms could be forced to create a fund that self-employed workers could tap into in case of an accident. In that way, self-employed workers could benefit from the protection of employee status while still enjoying the flexibility of contract work.

When prompted on what’s stopping him from adopting measures like this now, Bezzina pointed towards the nature of the market and the higher costs he would incur where he to go it alone. “I would go out of business,” he said. “The individualistic element of the market will continue to promote precarious work, lower prices over high. Ultimately customers want cheaper prices and low waiting times. The only way we can provide this is by hiring self-employed drivers.”

To provide protection, Bezzina explained, a company would need to jack up prices to make up for the insurance. “Our industry profits when society is having fun, like on weekends or public holidays, but you need to pay employees double to work on those days.”

In the case of a self-employed driver, a company only needs to pay the stipulated rate, making it an easy cost-cutting measure.

And this is why Bezzina is all for better regulation in the market. Protecting workers costs money, “but if one company has to abide by the law, every company should”.

“You can either have a regulator that is reactive or proactive, but it shouldn’t take a regulator three years to take action, while in that period you end up giving a competitive advantage to those breaking the law,” he said.

“We made it easier for everyone to start in this industry, we kickstarted the revolution on the island, we tried to abide by the law, we increased standards. Competition is healthy, but it’s healthy when you have a level playing field.”