Uber in Finland: waiting for the deregulation of the taxi market

drive-863123_640Uber has decided to withdraw its primary service out of Finland, as it expects the vote of a new law presented to the Finnish Parliament in April According to the Parliament, the new Act on Transport Services will “significantly enhance the implementation of new technology, digitization and new business concepts”, Uber expects that the new law, which will allow anybody to become a taxi driver after getting  a license not submitted to any quotas, will  allow its services to become legal without costs for the US company.

In the meantime, according to the Uber representative in Finland, “we have decided it is best to pause UberPOP from 15th August until the new regulations allow a better environment […] During the pause, and while we wait for the new law to come into effect, we know that there are hundreds of drivers who will unfortunately not be able to make money through the app. We are fully committed to supporting them throughout the waiting period and will help them transition to the new system as seamlessly as possible“. However, the licensed UberBLACK will continue operating and Uber’s Finnish staff will stay with the company to help prepare for next year.

We did not see the new Finnish law  in English, but it does not seem very detailed at this stage, and future government regulation may be deciding about Uber’s fate. For the moment, you cannot drive a taxi in Finland without having a specific driving license, and the number of such licenses is limited. The new law seems to allow anybody passing the tests to get such a license. So Uber is interpreting the new law as the possibility to all individuals to operate as taxi drivers in their own vehicles, but it is quite difficult to know if that will be the case. In particular, justice may well continue to consider that Uber is the employer of its drivers, with all the constraints attached (and that Uber refuses).

It is interesting to have a European view of the topic. Uber has  been forced to suspend the service, which relies on nonprofessional drivers using their own vehicles, in particular in Germany, France, Italy, Spain, Sweden and Belgium.

In last December, in Sweden, a year-long investigation was concluded and handed over the Swedish Infrastructure Minister. A “Taxi and Ridesharing commission”  was set to investigate three key issues relevant to the mobility sector:

  1. Whether a taximeter should be mandatory in all vehicles used for taxi services.
  2. Whether there is a need for a new category of professional drivers (or semi-professionals) who carry passengers with their private car, light truck, or any other vehicle.
  3. Whether there is a need to change or clarify the existing rules for ridesharing between private individuals.

The commission proposed a progressive legislation:

  1. No mandatory traditional taximeter. Instead, the commission proposes a “special equipment for taxi vehicles” which should be connected to the taxi company dispatching drivers, measuring distances, and collecting payments. Taxi companies must account of these rides to the tax authorities.
  2. On-demand taxi service drivers who earn a profit from carrying passengers should own a license.
  3. Ridesharing, where the trip’s costs are shared between people with the same destination and the same itinerary, should not be defined as taxi traffic even if the persons concerned are not familiar with each other.

This does not seem to cover the Uber model.

One can consider that the arrival of Uber would increase the competition, by offering more alternatives for the customer, better prices and a better service. But that can happen without Uber, just by liberalizing the pricing system and opening the door to new taxi companies.

In addition to security and quality concerns, two points are worrying. The first one is that the income of taxi drivers is going to go down, and in other countries the average salary of Uber drivers is under the minimum salary the country, in particular because Uber takes between 30 and 50 % of the driver’s income for its digital services provided from abroad. And the second one is that Uber profits from Finland will be taxed abroad, probably in countries where taxes are minimum or non existent, when taxi companies pay their (high) taxes in Finland.

 



Categories: Government, transport

Tags: , ,

2 replies

  1. Self-driving cars are being developed at a rapid clip, and most likely will make the whole point moot. In fact, Uber is already testing the pilot program in Arizona. A much greater question will be what will all the unemployed drivers across the globe do once the automatic cars becomes the dominant mode of motor transportation: https://www.theverge.com/2017/2/21/14687346/uber-self-driving-car-arizona-pilot-ducey-california

    Like

  2. Self-driving cars will make this discussion quite moot in the near future. Uber is already doing a pilot program in Arizona. It is going to be a far greater challenge to find jobs for all the millions of unemployed professional drivers. https://www.theverge.com/2017/2/21/14687346/uber-self-driving-car-arizona-pilot-ducey-california

    Like

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