Brazil – Working conditions: How the city of Rio de Janeiro tricked Uber

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Taxi driver Rubens da Silva uses the city's own Taxi Rio app

Photo: Ian Cheibub / DER SPIEGEL

Rubens da Silva loves his job.

The man with the friendly eyes has been driving a taxi in Rio de Janeiro for 17 years.

He likes the contact with the customers, the many tourists.

"Every day something new happens, someone tells an interesting story," he says.

The job is the best thing that could happen to someone like him.

“I went to school for four years.

Engineers and doctors also drive taxis.”

Da Silva, 44, often works six days a week, averaging twelve hours a day.

The father of two children used to earn quite well, around 7,000 real (1,250 euros) per month.

But then, in 2014, Uber entered the market and began "stealing customers."

Da Silva went to demonstrate with his colleagues.

"I've been to at least ten protests," he says.

They also fought for the rights of Uber drivers.

“People ride in flip-flops.

You can't live on Uber."

But the app-based travel agent Uber lured with cheap offers and conquered the business.

Taxi drivers' earnings have plummeted, a problem many cities have grappled with since the San Francisco-based US service company expanded globally.

Taxi drivers protested in many countries.

Uber has been banned in some cities around the world, but the Brazilian Supreme Court ruled against it in 2019.

The city of Rio de Janeiro then decided to beat the company at its own game.

It competed with the travel agent with an idea that was as simple as it was creative: developing its own public taxi app,

funded by the city.

"When Uber came onto the market, we thought taxis would simply disappear," says Pedro Paulo Carvalho Teixeira, economist and Minister of Finance and Planning at the Rio de Janeiro City Council are real alternatives.«

The idea came up back in 2015, shortly after Uber entered the market.

Two years later, the app was completed, developed by the city-owned tech company IplanRio.

»Meanwhile, 70 percent of the taxi drivers are registered with us«, says

Carvalho Teixeira.

An advertising campaign was not necessary, the app just spread like that.

They have already taken over six cities in Brazil, including Niteroi, Nilópolis and Maceió.

Around 65 others are interested;

you work on contracts.

The Rio Municipal Taxi app is free for drivers to use.

According to the city administration, a taxi driver earns around 85 to 100 percent more than an Uber driver.

Many of the one million Uber drivers in Brazil work seven days a week to make a living.

They used to have to pay a fixed 25 percent of the fare to the app operator, but the fee has been “variable” since 2018, according to the company.

However, that also means the Rio app is a subsidy deal — it cost the city R$8.3 million to develop.

And monthly Rio de Janeiro has to pay one million reals to maintain the service.

"This matter is so important to us that we pay this price," says Carvalho Teixeira, who belongs to the Social Democratic Party. "We don't have any direct income from the app, but we do have indirect income." Something would be done for social peace.

The self-employed taxi drivers also paid taxes in Rio de Janeiro.

The placement company Uber, meanwhile, pays primarily where it is based – namely in the tax haven of Osasco in the state of São Paulo.

"This is problematic because Uber uses our city infrastructure, generates environmental costs - and at the same time contributes little to the community," says Carvalho Teixeira.

In March 2021, Rio de Janeiro introduced a smaller road use levy for taxi and Uber drivers

a.

"That's the only way we found out that almost 90,000 Uber drivers are active in our city, otherwise we have little control." The company keeps a low profile, numbers and data are hardly published.

The tax has since been overturned in court.

In order to be able to keep up with Uber, the city-owned technology company IplanRio has developed a smart system: The Rio taxi app specifies a fixed base price for the routes.

At the same time, drivers have the opportunity to offer discounts of up to 40 percent on the fare, which makes taxi rides more attractive for customers.

Since Uber adjusts its prices to current demand, it can sometimes even happen that taxis are cheaper, for example on New Year's Day.

According to the city administration, taxi drivers now have a market share of 30 to 40 percent in the trip business in Rio de Janeiro, and the trend is rising.

In any case, downloading the taxi app has paid off for the taxi driver Rubens da Silva, he acquires some of his customers this way.

Although he doesn't earn quite as much as he used to, he still earns more than two thirds and he can live on that.

"Our aim is to take countermeasures and balance out certain undesirable developments in the market," says Carvalho Teixeira.

He still has a lot to do: Next, he plans to tackle the problem with the food delivery services.

Around 100,000 people, most of them men from the favela, work as courier drivers in Rio de Janeiro alone, and their number has risen sharply during the pandemic.

The courier drivers have to give a large part of their earnings to the operators of the apps called »ifood« or »Rappi«, the working conditions are exploitative and the wages are low: »They slave away 12 to 14 hours a day;

it's a draining, badly paid job.«

The municipal technology company IplanRio is therefore currently working at full speed on the next app: a city-owned broker for food deliveries.

The app should be launched soon, be free to use and improve the lives of delivery people.

It should be called "valeu," something like "Thanks, cool."

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