An Uber plan to cut its prices has sparked criticism from drivers and the transport union, who are accusing the gig economy giant of leaving workers high and dry amid the cost-of-living crisis.

Uber has notified drivers in major Australian cities including Sydney and Brisbane that it will shave rates from August 7 by changing the way it accounts for the distance drivers travel.

“We will be changing the time and distance rates used to calculate rider fares,” Uber told drivers.

“In most cases, the rates will be lower than those currently used.”

Driver anger

But many drivers are reacting angrily to the emails, which are being shared in social media groups, with one worker even saying the shift will push them towards rival service DiDi.

“We barely cover our costs, let alone earn a decent profit. Now Uber is lowering the fares to get more market share at the expense of drivers,” they said.

The Transport Workers Union (TWU) has also sounded off over the plan, with national secretary Michael Kaine saying that drivers are bearing the brunt of an unregulated market for gig work.

A survey by the McKell Institute in 2023 found three-quarters of gig economy contractors are working long hours to make ends meet, while two-thirds earn less than the minimum wage.

“Some of the most vulnerable and underpaid workers in our economy are once again facing cuts to their earnings in a market that’s in free fall,” Kaine said.

“Rideshare drivers with no rights to minimum wage or other entitlements have spent the night wondering how they’re going to pay the bills next month.”

Uber price changes explained

For its part, Uber told drivers that the changes were designed to boost demand.

The rideshare giant has been facing competitive headwinds in recent years from rival platforms and like all other consumer-facing businesses is currently facing a squeeze as households draw back on discretionary spending to navigate the cost-of-living crisis.

Australians are spending less eating out and shopping, which means they’re also travelling less.

The fare cuts will be implemented through changes to what Uber calls “time and distance” rates.

“The changes will include different time and distance rates based on geography, as well as the time of the trip,” Uber told drivers.

“We anticipate that these changes will lead to an increase in rider demand and result in more trips for driver partners.”

But some drivers are reacting with scepticism on social media to the idea that Uber is doing them a favour, with one suggesting that higher demand was not necessarily something that benefits workers.

“There could be a million more trips available per hour, but for any individual driver they can only finish X number of trips per hour,” they said.

Reforms loom

A tranche of Albanese government reforms that will introduce minimum standards for rideshare are looming over Uber’s price cut, with their implementation set to shift the balance of power.

The changes define gig economy workers as “employee-like” instead of merely contractors, which had been a loophole in workplace laws that gig economy platforms have used for years.

The designation will come with updated rights, such as minimum pay rates set by the industrial umpire and other protections to improve safety.

Kaine said Uber’s price cut showed the need for the standards to be implemented urgently.

“The longer it takes for a minimum standards order to be determined, the lower pay and conditions will sink,” he said.

“Stopping the free fall with a safety net of binding standards that can be built up over time is critically urgent for gig workers and companies alike.”