Thu, Sep 12, 2019 - Page 9 News List

Ride-hailing platforms require better government regulations

By Olga Morawczynski and Julie Zollmann

These drivers report feeling pessimistic that government will intervene on their behalf. Some drivers we interviewed believe that driver-association leaders organize strikes for self-serving reasons.

However, choosing not to participate in a strike carries significant risks.

During the May strikes, participants used WhatsApp to divide themselves into groups, with each covering a geographic zone. Their job was to intercept drivers who, in their view, were undermining the cause.

Sometimes, they damaged the spoilers’ vehicles or confiscated their mobile phones. As Benson, an early entrant into the online taxi business, told us: “Most drivers don’t work during strikes for their own safety and that of their cars, not because they are also striking.”

There is only one way to ensure that ride-hailing platforms deliver for both riders and drivers: better government regulation. To this end, governments must first clarify who has the relevant regulatory authority.

In Kenya, drivers are given permits by the National Transport Safety Administration, but platforms like Uber — which are registered as technology firms — are not under the agency’s jurisdiction.

Kenya’s Cabinet secretary for labor and director general of the Competition Authority of Kenya also stated that intervening in platform pay was out of their respective remits.

This leaves drivers with nowhere to turn when their interests are disregarded and puts platforms at risk of more radical state intervention in the future.

Once a regulatory authority is designated, it will need to design effective policies, which requires data.

As it stands, platforms not only control pricing, but also hold troves of rider and driver data, creating significant information asymmetries between platforms and drivers, and between platforms and policymakers.

Regulators should insist on access to the information they need to make sound policy judgments.

Platforms that claim to be marketplaces should function more like competitive markets and less like monopolies.

Strikes can draw attention to the problem. However, only well-crafted regulations can fix it.

Julie Zollmann is a doctoral candidate at The Fletcher School at Tufts University. Olga Morawczynski is senior program manager at the Mastercard Foundation.

Copyright: Project Syndicate

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