The cab driving industry has been the subject of recent debate in light of the government’s 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 and abusive business practices, 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 his statements were a frank and welcome admission of the truth.
I have been a cab driver for the 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 a modern-day slavery.
‘Importation’, although a crude word, is a suitable one. The third-country worker in this industry has become like a rat on a wheel, imported with a brand new cab ready to go. The unlimited influx of cabs has flooded the streets and saturated the market through unscrupulous working conditions.
This is not an issue of race. The workers themselves are not to blame for their predicament. It’s the unscrupulous way in which the big players have exploited the unregulated market that is to blame.
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 of the garaging requirements for Y-plate operators.
In order to hold an operator’s licence and hold a Y-plate, they must show 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 Maltese roads. One questions how many garages such fleets have at their disposal to house 300 vehicles. Healthy competition is welcome but it is clear that such measures have anti-competitive effects.
The 50:50 commission relationship is a compensation structure that raises suspicions. At face value, nothing seems wrong with it. The more you work, the more you earn. But this commission relationship has been intricately crafted for this sector. It comes in the guise of a performance guarantee but it is much more than that. How can a worker be employed full-time with a monthly salary and, at the same time, be compensated at the rate of 50%?
Workers with a monthly base minimum wage are actually earning much more than that but the rest of their earnings are classified as after-tax expenses or bonuses. They can declare a monthly minimum wage but earn twice as much if not more on this revenue sharing model.
This is a recipe for tax avoidance and circumventing the conditions of a single work permit in an exploitative model that forces people to work inhumane hours. It is a destructive model with significant anti-competitive repercussions.
This is not just an issue of worker’s rights. It is also a road-safety issue. Overworking employees and depriving them of any economic safety net affects their ability to abide by traffic regulations and maintain their safety – because 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 a welcome one. It is time to ensure a level playing field for all and rebuild the sector with much needed enforcement and legislative reforms.
This recent decision by the government concerning third-country nationals has evoked mixed reactions, predominantly positive ones. Other reactions have been deeply troubling, revealing underlying populist agendas at best and political motivations at worst.
It is ironic that certain individuals who claim to champion the rights of third-country nationals incite public outrage over sudden fare increases, conveniently shifting the blame onto the government for addressing an urgent and long-standing issue.
The unlimited influx of cabs has flooded the streets and saturated the market through unscrupulous working conditions- Aron Gatt
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 the government’s decision to reject 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 simply retaliation against the government for seeking to regulate an abusive market. The decision was described as leading to an exodus of drivers but Home Affairs Minister Byron Camilleri explained that current workers would not be affected.
It is very worrying when a platform whose business model is to be solely a technology platform working on a commission basis goes all out against a decision intended to curb abuse.
The reaction begs the question: how are these platforms classified? Are they a ride-hailing platform or something else?
Self-employed cab drivers like me have been lobbying for years over several issues faced by operators, including earnings. We were met with the same answer from the platforms: “It is up to government to regulate the oversupply.”
When small operators take their issues to some platforms, the answer to hard-working Maltese men and women is clear: “If the job is not giving you decent earnings, find another one. 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 public.
It is high time to better regulate the grey areas in which these platforms operate concerning labour practices, passenger safety and fare structures. The recent behaviour of one of the major ride-haling platforms in recent days is a testament to this.
Effective legislation can address these issues by setting clear standards for the protection of both the operator and consumer, implementing comprehensive safety measures and ensuring fare transparency.
The lack of regulation extends to fare structures, where dynamic pricing can surge dramatically as seen over the last few days, leading to exorbitant and unrealistic fees.
Legislation can address these grey areas by introducing minimum price capping and ensuring a fair and consistent fare structure.
By establishing a regulated minimum fare, the regulator can prevent exploitative pricing while guaranteeing that 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.
Aron Gatt is president of the Light Passenger Operators Association (LPOA), a lobby group of self-employed cab operators.