Exploitation and acquisition by false pretenses of wage subsidies for Uber

RBB Abendschau programme raises serious accusations against US companies

In an Abendschau report from 26 October 2020, a hire car driver describes the Uber system. With hourly wages of less than 4 euros, employees are forced to work excessive hours and provide false information when applying for social benefits.

27 October 2020 by Klaus Meier 

All the versions of this article: [Deutsch] [English]


In our archive: RBB Abendschau from 26.10.2020 [1]

The RBB report

The article entitled From the everyday life of an Uber driver confirms what all knowledgeable sparrows are whistling from the rooftops:

 Berlin Taxis are currently transporting  [2] less than one passenger or less per hour. This is not better for Uber vehicles in Berlin.
 Uber drivers earn barely 4 euros per hour. They receive 20 to 25 per cent of the revenue, after the Uber group has retained 30 to 35 per cent and the car hire company 45 per cent.
 Many therefore work 12 or more hours every day of the week without breaks.
 The Uber drivers receive most of their salary under the table.
 They are registered for tax and health insurance as mini-jobbers with a monthly income of 450 euros, for example, although they earn up to 1500 euros net.
 The drivers also receive unemployment benefit II and thus earn a monthly income of 2,000 euros or more.
 Uber argues that such practices are expressly prohibited in the contracts with its subcontractors.


We know that the car hire companies that carry out journeys on behalf of Uber can easily manipulate their accounting without fear of detection, as there is no route, turnover or working time recording in their cars.

The US company Uber, on the other hand, knows the turnover and routes of the journeys driven all the more precisely and has every opportunity to recognise violations of the Working Hours Act and tax laws.

The abolition of the local knowledge test for hire car drivers on 7 July 2017 has had a remarkable impact. [3] made the fraudulent business model described in the article possible on a large scale. Previously, there were not enough authorised drivers who would have been willing to work for so little money. The effort involved in preparing for the local knowledge test and its high failure rate limited the number of potential victims of exploitation. [4]

The economic consequences are massive

The systematic misuse of unemployment benefit II as a wage subsidy by Uber and its contractors has led to the emergence of another sector of the poverty economy in Germany.

In Berlin, 20,000 to 30,000 drivers of Uber vehicles and taxis, together with their families, are victims of the machinations of Uber lobbyists, transport policy and exploitative companies.

If politicians and the administration do not put an end to this development and ensure that wages comply with the law and the necessary framework conditions are enforced, all taxi and hire car companies that abide by the law will be driven to ruin. Without courageous intervention, the already existing parallel society of defenceless exploited people and brutal exploiters [5] will become even more entrenched. This would not only be a great social injustice for those affected but would also result in high costs for the city of Berlin.

Who profits?

The massive arrival of Uber in Germany was only made possible by the illegal undercutting of the already extremely low taxi wages.

Nevertheless, the majority of taxi companies  [6] need not fear the future, as the Ministry of Transport is currently initiating the abolition of the local knowledge test and a relaxation of the tariff obligation for them too. These two measures will also make it much easier for dubious taxi companies to conceal illegal wages below the minimum wage level.

The US company Uber can take credit for all this as a success of its lobbying work. After the Uber taxi, Uber attacks countryside affairs [7], Uber Eats [8], Uber Works [9] and other trial balloons. This does not always work, but the Uber Group is pursuing its goal of destroying public institutions through disruption [10] in a much more persistent manner than most other US start-ups and Internet companies.

What to do ?

Taxis and hire cars require a so-called licence, which is issued by the municipality in which the company is based. This licence can be refused if there are doubts about the reliability of a company. If the supervisory authority does not authorise a company to operate taxis or hire cars and does not grant it a licence, it is up to the company to dispel any doubts about its reliability by providing comprehensive documentation of its business operations. This tool is used only hesitantly in Berlin and apparently not at all in the district of Dahme Spreewald [11] to take action against companies that do not pay the statutory minimum wage or conceal turnover [12] and practise undeclared work.

It is up to the supervisory authorities to prevent honest taxi and hire car companies from being forced out of the market by their fraudulent competitors [13].

— -
Image source: WIkimedia Commons  [14]

[1The original address of the programme in the RBB media library was https://www.rbb-online.de/abendschau/videos/20201026_1930/fahrer-aus-berlin-erhebt-schwere-vorwuerfe-gegen-uber.html It can no longer be accessed today. The evening programmes only remain in the ARD media library for a short time. We have therefore downloaded and archived a "specimen copy" via the WWW site MediathekViewWeb, where most of the content of the ARD Mediathek can be legally downloaded.

[2The RBB report is from October 2020. During the nationwide November lockdown, turnover and therefore wages are considerably lower, putting even more pressure on drivers to work long hours. This turns the drivers of Uber cars into time bombs who put other road users at risk due to their overtiredness. The absence of any working time recording in the Uber hire cars thus becomes a murderous affair.

[3Taxi Times report on the abolition of the local knowledge test for hire car drivers on 7 July 2017 at the URL https://www.taxi-times.com/ortskundewegfall-fuer-mietwagen-im-bundesrat-beschlossen/

[4In Berlin, the number of Uber vehicles reached a significant level from the summer of 2018. At the turn of the year 2019/2020, Berlin’s taxi turnover had fallen by 20 to 30 per cent despite the ongoing tourism boom, and numerous companies intended to cease operations. As the losses were mainly borne by the employees and partly offset by longer working hours, the number of closed taxi companies remained low. It was only the economic shutdown in spring 2020 that forced the return of around 1,000 taxi licences.

[5The abolition of the local knowledge test was driven forward by Federal Transport Minister Andreas Scheuer. In doing so, he opened up a huge labour pool for hire car companies. They can now promise unemployed people that they will pay them over 1,000 euros a month in black money without any risk.

[6For Berlin, the official economic efficiency report from 2016 showed that 77% of taxis and around 80% of companies did not have a plausible economic model, meaning that their accounting did not correspond to reality, at least in large parts. As the overall economic data has not changed for the better since then, it must be assumed that all of these companies do not pay their employees the now statutory minimum wage and that they also use illegal methods to reduce their costs.

[7In Uber’s ’Kirchheim project’ in the Munich suburbs, the company’s activities are subsidised by public funds, reports Taxi-Times. Presumably, the municipality wants to save the costs of its own public transport service in the long term. In this way, the group is working on taking over and abolishing public services for everyone.

[8The messengers of the delivery services are generally not employed as employees subject to compulsory insurance but as self-employed persons who have to provide and pay for their own work materials such as bicycles, smartphones, spare parts and tools as well as their own clothing. This type of employment as a contractor is permitted in the Group’s home country, although it leads to the employees being completely at the mercy of the company. In Germany, if the company does not register the bike messengers regularly with the social security system on the basis of an employment contract, they are bogus self-employed workers for whom the company must pay social security contributions in order for them to be entitled to a pension, health insurance and unemployment benefit. This is difficult to enforce, as most messengers leave the company after just a few weeks.

[9In this project, which has since been sent into hibernation by the group, Uber becomes a universal labour broker. Like all start-ups, the company promises its investors huge profits by achieving unicorn status, a nice way of describing its de facto monopoly position in an industry. Uber does not assume any responsibility for the placement of labour, but shifts it to temporary employment agencies, which in turn only pay if the direct exploiters give their OK.

[10In German-speaking countries, the perception of the term disruption is similar to Schumpeter’s creative destruction, but in its US interpretation according to Ayn Rand, it becomes an ideology that wants to destroy all social institutions and hand them over to market forces in a completely privatised manner. The British neoliberal Margaret Thatcher expressed it in the sentence There is no such thing as society. What a person and their family cannot realise through their own wealth and abilities should not, according to this idea, be taken over by the state or society. Social welfare and solidarity between the wealthy and the poor are rejected as expensive and harmful. The promises of profit made by Uber operators to their investors are based on the implementation of this brutal social model.
Further URLs

[11The new capital city airport Willy Brandt / BER is located in the district of Dahme Spreewald. Unlike the city of Berlin, the district does not oblige its taxi companies to install a so-called fiscal taximeter, thus enabling fraudulent companies to easily manipulate turnover, wage and working time records to the detriment of their employees and the general public.

[12The Taxi Times reported on 5 November 2020 under the headline "Suppression of turnover and corona aid - that doesn’t fit" quote: Well-founded and honest turnover data helps those responsible for the industry to negotiate corona aid for the ailing taxi sector. Studies on implausible taxi rates and accusations of speedometer manipulation, on the other hand, do the industry a disservice. Taxi and Hire Car Association President Michael Müller continued: ... emphasised to taxi operators that when asking for industry-specific corona aid, they often do not have reliable figures to statistically prove the extent of the slump in turnover and the associated need for support.

[13There is hardly any other industry where profits, turnover and wages are kept as secret as in the taxi industry. In the trade magazine Taxi-Times, Taxi and Hire Car Association President Michael Müller therefore laments the absence of credible business figures and statistics as a prerequisite for aid to survive the coronavirus protective measures. To this end, losses must be proven on the basis of operational records that stand up to comparison with records for the industry as a whole. At least for part of the taxi industry, some taxi companies from Munich and other cities are now publishing their monthly turnover online at https://www.taxileaks.de. These figures are an indication of the development of turnover in parts of Germany. However, statistically reliable data from association and official sources look different.

[14Logo und Illustration: https://de.wikipedia.org/wiki/Datei:Skulptur_Masurenallee_16_(Westend)_Sandmann%26Thomas_Lindner%262019.jpg Lizenz: GNU-Lizenz für freie Dokumentation, Version 1.2

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