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Forced hiring of drivers costs Uber 500 million in the UK

2021-05-07T15:58:34.653Z

The technology company fails to close the quarter with profits after improving the conditions of its workers by order of the British Supreme Court



Uber driver Johan Nijman drives through New York in August 2018 Drew Angerer / Getty

Uber drivers' labor victories are undermining the company's accounts.

The results for the first quarter of 2021, published late on Wednesday by Uber, reflect a hole of 600 million dollars (498 million euros) in the form of supplies aimed at increasing the social benefits of its drivers in the United Kingdom , after a ruling by the British Supreme Court forced Uber in February to hire them.

Consequently, the technology company closed the quarter with losses of 108 million dollars (89 million euros).

More information

  • Uber hit in the UK: Supreme Court rejects drivers being self-employed

Uber shares closed this Wednesday with a fall of 3.4%, reaching the minimum of the month of January, and have continued to fall (-3.75%) in the after-hours market. More than the quarterly losses, the fall in the stock market has been produced by the recent and notorious positioning of the Biden Administration in favor of the hiring of false self-employed in the United States, especially in the sectors of home delivery and taxi service.

This Wednesday, Democrats have withdrawn the so-called Independent Contractor Rule, promoted by Trump shortly before the end of his term, in January, and aimed at facilitating the use of freelancers by platforms such as Uber, Lyft or Doordash, which has These companies were punished in the Stock Market.

"Too often, workers lose important wage protections when employers misclassify them as self-employed," Labor Secretary Marty Walsh said in a statement Wednesday.

Uber shareholders fear that a possible regulation of employment in the US will cost the company much more than the 600 million in the United Kingdom, since North America accounts for 63% of the company's income and, therefore, groups many more drivers.

Following the ruling of the British Supreme Court, Uber was forced to rename its drivers as "workers", not "employees", which ensures them a minimum wage during their journeys (not in waiting periods), paid vacations and contributions to the pension.

But it does not cover sick leave, paternity leave and they have less dismissal protection than employees.

This reform did not apply to Uber Eats deliverymen, who continue to be self-employed.

Uber cuts losses and approaches profits

Uber's quarterly results show a notable improvement in business compared to previous quarters, despite losses of 108 million.

In the first quarter of 2020, partially affected by the pandemic, Uber lost 2,936 million.

In the fourth quarter of 2020 it lost 968.

The accounting improvement of the company, founded in 2010 and based in San Francisco, was mainly due to cutting expenses, including personnel, and increased revenues. The sale of its autonomous vehicle research and development division, which earned US $ 1.68 billion this quarter, also had a strong impact.

The reopening of the economy, especially in Asia and the US, allowed Uber to increase travel revenues by 14% compared to the last quarter of 2020. The Uber Eats division was once again the one that added technology and already represents the 63% of your income. Uber Eats' billing between January and March grew 166% year-on-year and 24% compared to the last quarter of last year. The passenger transport division continued at levels from the fourth quarter of 2020, as did the parcel shipping division.

In a conference with investors, the leadership of the technology company acknowledged on Wednesday that the hiring of drivers will also reduce Uber's accounts for the next quarter, reducing the profit margin for each trip by 20%, according to figures collected by

Bloomberg

. which also explains the stock market crash of the technology company.

Source: elparis

All business articles on 2021-05-07

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