Exposed: The hidden cost of hailing a cab | Aron Gatt

The cab driving industry has been the subject of recent debate, plastered onto social media platforms and newspaper articles, in light of the government’s recent decision to no longer accept work permit applications for cab drivers and food couriers.

This has been a long-awaited decision, clamping down on abusive business practices by certain players in the market. This sector has been built on modern-day exploitation, characterised by artificially low prices that was steering towards a point of no return.

As a cab driver and president of an association representing self-employed operators, I have followed closely the statements made by the Prime Minister, about the saturation point reached by the cab industry. The facts are blatantly evident and visible to anyone willing to look. The Prime Minister’s statements, were a frank admission of the truth, and a welcome one.

I have been a cab driver for a better part of a decade. The industry has shifted from self-employed operators working flexible hours with a decent income, to an industry built on select fleets taking over the market with the ‘importation’ of third country nationals, leading to modern-day slavery.

‘Importation’, although a crude word, is the most suitable one given the circumstances. The third country worker working in this industry has become like a rat on a wheel, being imported to this country with a brand-new cab ready to go. In turn, the unlimited influx of cabs had flooded the streets and saturated the market with unscrupulous working conditions.

This is not an issue of race. The workers themselves are not to blame for this predicament. If anything, it’s the unscrupulous way in which the big players have exploited the unregulated market. Other issues are also at play, such as the suspicious 50:50 commission relationships between fleets and their drivers, as well as lack of enforcement on the garaging requirements for Y-Plate operators.

In order to hold an Operator’s License and operate a Y-Plate, one must show that they have a 24/7 dedicated garaging space at their disposal to house the vehicle when not in use. Numerous fleets have structured an enterprise based on the illegitimate exploitation of drivers and the illegal parking of vehicles around the Maltese roads. One questions how many garages do such fleets have at their disposal in order to house a Y-plate vehicle, let alone 300. Healthy competition is something we have always welcomed, in any industry, but it is clear as day that such measures do not foster healthy competition. If anything, they have anticompetitive effects.

The 50:50 commission relationship, is a compensation structure that raises suspicions to say the least. At face value, nothing seems wrong with this structure. The more you work, the more you earn. Similarly, to any job, longer hours lead to higher pay, but this commission relationship has been intricately crafted and perfected for this sector. This structure is guised as a performance guarantee, but it is much more than that. How can a worker be employed to work as a full-time driver with a monthly salary and at the same time be compensated through a 50:50 model (50% for the driver and 50% for the fleet)?

Let’s say a worker has an employment contract with a monthly base salary for minimum wage. In actual fact, the worker is earning much more than a base minimum wage with a 50:50 commission relationship, but the rest are classified as after tax expenses/ bonuses. So how can the worker declare a monthly minimum wage when in actual fact, he is earning twice as much if not more on a revenue sharing model? This is a recipe for tax avoidance, and circumventing the conditions of a single work permit to an exploitative model of working inhumane hours with an illegitimate commission-based model. This is an illegitimate and destructive model with significant anti-competitive repercussions.

This is not just an issue of employment relations and workers’ rights: This is also a road-safety issue. Overworking your employees, and depriving them of any economic safety net, will certainly affect any individual’s ability to abide by traffic regulations, and maintain their safety, with the hope of earning more money. The more hours you spend on the wheel, the more you get paid.

The crackdown on such exploitative tactics by enforcement bodies such as the police, Transport Malta, JobsPlus and Identità is also a welcome one. It is time to look ahead and ensure a level playing field for all, and rebuilding the sector with much needed enforcement and legislative reforms.

This recent decision by the government on third country nationals has evoked mixed reactions, most being predominantly positive; yet some responses have been deeply troubling, revealing underlying populist agendas at best, and political motivations at worst. It is ironic to observe how certain individuals, who claim to champion the rights of third country nationals, simultaneously incite public outrage over sudden fare increases, conveniently shifting the blame onto the government for addressing an urgent and long-standing issues.

What happened next was shocking… but not surprising. A sudden spike in cab prices overnight.

Representatives of one of the big three players in the ride-hailing industry confirmed that government’s decision to refuse work permit applications was the sole reason for the increase in both cab fares, and waiting times. Surge pricing was the term used – a vague excuse for exorbitant and unrealistic prices.

It is retaliation against government for seeking to regulate an abused market.

The ride-hailing platform insists that the current supply is not enough to meet the company’s demands, whilst also blaming government for the spike in prices. This is an incorrect argument on so many levels.

This recent decision was blamed for an exodus of drivers, but in reality, Home Affairs Minister Byron Camilleri explained that current workers in the industry will not be affected. It is very worrying when a platform whose business model is solely intended to be a technology platform working on a commission basis, goes all out against a decision intended to curb abuse.

This reaction begs one question. How are these platforms classified; are they a ride hailing platform, or are they something else?

Self-employed cab drivers such as myself have been lobbying for years on end on several issues, including the need for better earnings. We were always met with the same answer from these platform companies: ‘It is up to government to regulate the over-supply.’

When small operators spoke, these platform companies always gave crystal clear answers: ‘If the job is not giving you decent earnings, find another one’; or ‘if you don’t like it, leave’.

This hidden house of cards is starting to shake, and the effects are now being felt by the general public.

Ride-hailing platforms operate in a largely unregulated landscape, which has led to various grey areas concerning labour practices, passenger safety, and fare structures. This unregulated shift can be observed in various countries like the United States and Malta is no exception. The recent behaviour of one of the major ride-hailing platforms in recent days has been a testament to this.

Effective legislation can address these issues by setting clear standards for the protection of the operator as well as the consumer, implementing comprehensive safety measures, and ensuring fare transparency.

This lack of regulation extends to fare structures, where dynamic pricing can surge dramatically as seen throughout these past days, leading to exorbitant and unrealistic fees. Legislation can address these grey areas by introducing minimum price caps, ensuring a fair and consistent fare structure that benefits both consumers and drivers. By establishing a regulated minimum fare, the regulator can prevent exploitative pricing while guaranteeing drivers earn a sustainable income, thus promoting a balanced and fair marketplace. This regulatory approach can protect passengers from price gouging and provide economic stability for drivers, fostering a more equitable and transparent ride-hailing industry.

Such frameworks can also establish accountability mechanisms, ensuring that ride-hailing companies adhere to consistent and fair practices, fostering a more equitable and safe transportation ecosystem.