App-based taxis bring radical shift in commuting culture
By Irfan Mohammed
Saudi Gazette
PAKISTANI cab driver Gulam Mohiuddin started work at 6 in the morning and by 5 p.m. he was only able to make SR100. He was still SR70 short of the daily lease he was obliged to pay the company that owns his taxi.
Exhausted and desperate after a full day roaming the streets of Jeddah looking for fairs, Mohiuddin was doubtful whether he would be able to even make the mandatory amount before midnight and absolutely had no hope of anything beyond.
A year ago Mohiuddin used to cross the SR170 benchmark before 10 a.m. He cited the arrival of the app-based ride-hailing service as the prime reason for the fall in his earnings.
“I pay every day SR170 to my company whereas the driver of Uber or Careem doesn’t. How come I compete with them?” he asked.
Correcting his necktie, he said he was exhausted after a day of roaming. He said he wanted to switch his job because the “limousine” has no future in Saudi Arabia.
Like Mohiuddin thousands of expatriate drivers are desperate to change their jobs as the taxi service in the Kingdom is in for a total overhaul.
The drivers complain that they are hardly able to earn the daily lease amount and some of them are preparing to return to their countries for good.
The popularity of Uber and Careem in Saudi society has been tolling the death knell of the so-called limousine that enjoyed monopoly in the Saudi taxi market for decades.
While the app-based ride-sharing services faced resistance around the globe from New York to London, Cairo and New Delhi, Saudis not only embraced it but also are enjoying the new trend.
Cheap and fast, in addition to being hygienic and safe, the app-based taxi has become the first choice for passengers because above all it is a time-saving concept.
The taxi aggregators are freeing up their war chest to offer incentives to drivers and discounted fares to the riders. Women switching to app-based taxis and expat labor leaving for good are among factors that make the conventional taxis irrelevant.
“The limousine companies are facing a difficult situation with the arrival of taxi aggregators,” admitted Said Al-Bassami, a leading businessman in the transport sector, who is also chairman of the National Transport Committee in the Council of Saudi Chambers.
He told Saudi Gazette that more than 50 percent of taxi drivers were affected within a short period as a result of the app-based taxi services. The taxi aggregators typically do not own any vehicle or employ drivers. They connect customers with drivers through digital platforms. It has been changing the dimension of the self-employment concept in the Kingdom, as the driver is more of a contractor than an employee.
The young Saudis have started enjoying the experience of this new wave of self-entrepreneurship. Also many young tech-savvy expatriates with new model cars are venturing into the field and making money without the need to roam the roads.
Taxi aggregators backed by venture capitalists are threatening to make every other taxi in the country irrelevant. According to reports, Saudis have invested $3.5 billion in Uber and another $100 billion in Careem.
Saudi Arabia has an ambitious plan of making the public transport sector, including Uber and Careem, fully Saudized, a fact that points to the potential of the sector. The authorities are determined to fill this vital sector with Saudis. Currently 70 percent of the drivers are Saudi nationals and it will be 100 percent in the next three years, according to a plan floated by the Ministry of Labor.
There is strong resentment in Saudi society about expatriates running the ride-hailing service with their own cars. Saudi drivers in aggregators and expatriate drivers in regular taxi companies complain about expatriate drivers with their own cars working for Uber and Careem, in contravention of Article 39 of the Labor Law, as well as the traffic rules.
“We have observed that the app-based taxi companies are violating the law by hiring expatriate drivers with own cars,” said Ibrahim Al-Shafi, deputy minister for labor. However, he said they could be employed as drivers by these companies but not as self-driving entrepreneurs like Saudis, according to the rules.
Al-Shafi recently held a meeting with representatives of the ministries of interior, transport and municipal and rural affairs to draw up a strategy to enforce the law by preventing expatriate drivers with own vehicles from working for the app-based taxi companies.
The Public Transport Authority is determined to achieve 100 percent Saudization in the taxi aggregators, which currently stands at 70 percent. Sooner or later, the Saudi limo would be fading into memory lane for sure. However, the taxi drivers are not the only ones whose jobs are on the line. Technology and market shifts have been affecting a wide range of fields where workers like Gulam Mohiuddin are not able to adapt and move on.
