Why is there an Uber shortage?

Have you noticed getting a taxi has become more difficult and expensive? You are not alone.

Uber has announced this morning (11 November) that it will raise its fares in Greater London by 10 per cent, and the price of London airport transfers during peak times by 25 per cent, in an attempt to curb a lack of available drivers. “We’re making these changes to help provide a better rider experience, by signing up more drivers to meet the growing demand”, a spokesperson told the New Statesman. In recent weeks, members of the public have said they worry about getting home from nights out, as taxis become increasingly unavailable – and when a ride can be found, it’s often much more expensive than before. The tech companies say there’s a lack of drivers – is this the whole story?

Uber drivers are rejecting more jobs because they aren’t earning as much

Nader Awaad, Uber driver and chair of the United Private Hire Drivers’ branch of the Independent Workers’ Union of Great Britain, has an acceptance rate of 18 per cent, meaning he takes on fewer than one in five of the jobs he’s offered through the platform. The others are all unsustainable at the rate-per-mile Uber now offers, which the union says has dropped by around 20 per cent since the Supreme Court ruled in February that Uber drivers were to be considered “workers” with rights to a minimum wage and paid leave.

As we spoke, Awaad was offered a 24-mile job – 48 miles in Friday afternoon traffic around Luton – for £29. Some jobs offer less than £1 per mile. “Hundreds of drivers are the same, because the jobs that are coming in have no value,” he told me.

Awaad said Uber’s new fixed-price fares are also a problem for drivers. “If you get stuck in traffic, if the road is closed and you do a diversion for two, three miles, if the customer decides on his way to stop at McDonald’s for five or seven minutes – it’s not counted.

“So drivers feel they’ve been ripped off, and drivers are retaliating by declining jobs.”

When lots of people try to get a cab in one location, companies often apply surge pricing – during which time drivers do earn more, but customers face much higher prices.

Ridesharing has been unrealistically cheap for years

In the second quarter of 2019, Uber lost $5.24bn on 1.68 billion trips, effectively paying consumers an average of $3.12 per trip to take over large swathes of the global taxi market. But while it may have eliminated thousands of minicab firms, it did not eliminate competition from other app-based rivals, such as Lyft and Bolt, which pursued similar pricing strategies. This means the areas where these companies have been most successful are most exposed to price hikes, because there is no other competition left.

Driver numbers have fallen, thanks to the pandemic and Brexit

The number of licensed vehicles – taxis and private hire vehicles such as Ubers – in England fell by 15.9 per cent from 2020-21. During lockdown, when cab drivers couldn’t work, many sought other employment – especially for the e-commerce and delivery firms that boomed as the world shopped online. The pandemic has also caused a reported backlog in registrations for those trying to enter the industry, squeezing driver numbers at both ends.

Brexit is also a factor: more than 200,000 EU citizens have left the UK, and the taxi industry (especially in the form of ridesharing platforms) made work quick and easy to find for people coming into the UK before Brexit; in 2016, a quarter of the Romanians and Bulgarians living in the UK were self-employed, mostly in construction and transport.

The cost of driving has risen drastically

Auto Trader’s average price for a three-year-old Toyota Prius hybrid was £11,600 in March; six months later, the same car averaged £17,759 – an increase of more than 53 per cent. The surging cost of second-hand cars, driven by increased demand and lower production of new cars (thanks to the global chip shortage, among other factors), has steeply increased the entry cost of working for ridesharing apps such as Uber or Lyft.

The price of crude oil has also doubled in the past year, and by 5 November petrol prices far exceeded their previous record to average 145p per litre. While most ridesharing drivers use hybrids to reduce their exposure to petrol price rises, this significant increase in costs bites still further into their profits.

Drivers are making higher fares when they’re driving — Uber drivers made an average of £23 per hour across nine UK cities in September 2021 while they had a customer in the car — but this doesn’t include the time spent waiting for fares or driving between jobs, or account for the higher costs of car ownership.

Uber says the outlook is bright for drivers, however. “Demand for Uber rides has soared”, a spokesperson told me, “leading to higher driver earnings. With drivers also receiving new worker rights such as weekly holiday pay and a pension, there has never been a better time to drive with Uber. We are continuing our efforts to sign up an additional 20,000 drivers to help meet this growing demand.”

Would you want to drive drunk people around at 3am?

As in the HGV industry and the pig farming industry, which is threatened by a lack of butchers, the nature of the job itself also makes it susceptible to turnover. Long, antisocial hours, traffic and rowdy customers mean that when circumstances – such as pay, costs, conditions or the wider economy – change, many drivers will take the opportunity to move on.

This article was updated on 10 November 2021 to clarify that Uber drivers have worker status, not employee status, and to add a comment from an Uber spokesperson.