Uber IPO is a bad bet

Loss-making Uber’s stock market float is a bad bet on a business that is facing a precarious future, according to the world’s main trade union body the ITUC. The company is facing strike and boycott actions called by its drivers in several countries in the lead-up to the initial public offering (IPO).

These actions follow a series of court decisions that challenge its employment model in several national jurisdictions, and scandals involving accusations of sexual harassment, software designed to escape regulators, safety risks, breaches of trade secrets, tax avoidance and allegations of bribery.

In the latest setback for Uber’s business model, a judgement by a Swiss court this week opens the way for Uber drivers to be recognised as employees instead of the sham “independent contractor” status that they are forced to accept by the company.

“Incredibly, Uber has said in its IPO filing that it may not make a profit. That in itself should sound alarm bells for investors. The company’s business model depends on ripping off the drivers who work for it, denying them employment rights and other entitlements continually driving their incomes down. Even with its poverty-wages model, Uber is unable to make a profit. With governments now waking up to the need to regulate, and courts recognising that Uber drivers actually do have legal rights, the prospects for future profit look negligible,” said ITUC General Secretary Sharan Burrow.

The share price of Uber competitor Lyft has already fallen almost 20 per cent since its March IPO, following a huge loss in the first quarter of 2019. Lyft has also reduced the amount of information available to investors, apparently to avoid “confusing” investors.

With only a tiny percentage of Uber drivers lasting more than one year with the company due to the exploitative way the company treats its global workforce, drivers in Uber operations in many countries are now organising into unions. Opposition from personal transport companies like Uber and from the American Chamber of Commerce to coerce regulators into depriving their drivers of basic employment rights have had some impact; however, the actions by drivers this week are expected to spread, and companies like Uber are now attracting close attention from governments and regulators around the world.

“The IPO is an opportunity to tell Uber that their business model must change. They are masquerading as modern, but are actually hiding exploitation. Not respecting labour standards and unions rights is not a sustainable business model. Uber is an employer and must take its responsibilities seriously. This week, our unions around the world have taken action to demand decent, safe working conditions for all Uber drivers, men and women,” said Steven Cotton, General Secretary of the International Transport Workers’ Federation ITF.

“Companies in every sector, including personal transport, can make a decent profit by treating their workforce with respect and recognising their rights. Unions are ready to talk to Uber about how it could become a legitimate and respectable company that treats its workers fairly and is sustainable. As it stands, Uber’s IPO offers a few individual executives and investors the chance to make huge profits, by trading shares in a company that shows no sign of making a profit. Potential investors should be very wary indeed,” said Burrow.