Uber is a go-to app in some Europe’s biggest cities—even where there are well-developed public transport systems. It’s also an important source of income for a gig economy that’s 28 million strong. But the ride-share giant’s future in the region may be under threat due to a proposed law on how gig workers are recognized, which could result in colossal job losses and cab fare hikes.
A European Union proposal, currently in the final stages of negotiation, plans to offer minimum salaries and more benefits to gig workers—including ride share and food delivery drivers—by giving them the status of a de facto employee. That could potentially shake up global ride-share leader Uber’s presence in Europe, forcing it to cut jobs and hike fares by up to 40%.
“If Brussels forces Uber to reclassify drivers and couriers across the EU, we could expect to see a 50-70% reduction in the number of work opportunities,” Anabel Díaz, the regional general manager for Uber’s operations in Europe, told Fortune in an emailed statement Wednesday.
She added that the company may have to stop operating in hundreds of cities in Europe, where it’s the leading player with presence in 3,000 cities and towns. And the scale of job losses and missed earning opportunities could be immense, Díaz highlighted.
“To put that into context, last year more than 1 million people earned on the Uber app in Europe, meaning as many as 700k people could lose access to flexible work, with a drastic reduction in earnings for the people who need it most,” she said. “That’s the equivalent of VW or Accenture going out of business.”
More benefits, but with a catch
If passed, the proposal—titled Platform Work Directive—would make companies including Uber, Deliveroo and the like offer benefits such as paid parental leave, social security and more to their drivers or riders, just like they would for a full-time employee.
The move has been in the works since 2021, following the COVID-19 pandemic when the gig economy was squeezed as demand for its services far outstripped supply. The need for legal certainty on the rights and status of gig workers became front and center across Europe as a way to help workers make a reasonable living from their “gigs.”
But Uber argues that a number of its gig-workers enjoy flexibility in terms of when and how they work, which is why a contract or self-employed worker status has been beneficial. A change in the existing model while adopting one that doesn’t recognize independent work would force Uber to limit its operations only to those parts of Europe where its services are highly demanded.
“In order to manage the costs of employment, Uber would be forced to consolidate hours across fewer workers,” Díaz said. “Drivers and couriers would need to apply for an open role, if one is available; show up for shifts at specific times and places; accept every trip they receive; and agree not to work on other apps.”
The ride-hailing company said it was all for regulations that could help improve workers’ conditions, but classifying them correctly is the key to achieving that and the current version of the PWD fell short in that regard.
“Unfortunately, as currently drafted the PWD will not provide legal certainty to the sector—on the contrary will lead to more litigation over platform worker status—and does nothing to improve working conditions for genuinely self-employed workers,” Díaz said.
Uber’s Europe saga
The lack of legal clarity has been a cause for concern for several years for platforms like Uber in Europe. Brussels has been pushing for laws that help level the playing field for online and traditional businesses—and which could serve as the blueprint for what the rest of the world follows on regulations for the gig-economy.
For its part, Uber has tried to adapt to the changing landscape of labor conditions by signing agreements with unions in France, Belgium and the U.K. that offer benefits such as pensions and holiday leaves. But inconsistent regulations across Europe continue to pose hurdles—for instance, Spain has placed limits on privately owned cars that carry passengers through a mobile platform like Uber as regular taxi drivers have pushed back on the competition.
“In Spain, where status reclassification has been promoted against the expressed wishes of riders, representatives of these riders estimate that 8,000 individuals are now out of work,” Delivery Platforms Europe, whose members include Uber, Bolt and Deliveroo, said in a press release on the impact of the PWD. The group also told Reuters in June that the broader EU proposal in its current form doesn’t “draw a clear enough line between employment and self-employment.”
Uber’s Díaz insists that the PWD’s impact on workers and the broader EU economy takes precedence its profits. She pointed out that Uber’s operations in 2022 more than €14 billion ($15 billion) was paid to drivers, couriers and merchants that the company works with, helping boost local economies.
“The EU has a once-in-a-generation opportunity to set the global standard for well protected, independent platform work,” Díaz said. “But of course it’s critical that the EU doesn’t outlaw independent work, which we know is the number one reason drivers are couriers attracted to the type of work Uber offers.”