Assessing the impact of courier reclassification in Geneva 1 year on: restaurant demand and work opportunities fail to recover

By Harry Elworthy, Economist and Alison Stein, Senior Economist

In September 2020, a series of court rulings led Uber Eats to change its way of operating in the Swiss canton of Geneva, from partnering with independent contractors to working only with a third-party fleet operator that hires couriers as traditional, scheduled employees who have to work fixed shifts. Shortly after, we saw that this change had very negative effects on couriers’ access to work, their flexibility, and their overall job satisfaction.

More than one year later, our data shows that the change to an employment model continues to have negative impacts on the number of work opportunities, and on the demand for deliveries from local restaurants. These effects are particularly striking when comparing Geneva’s development to that of other cities in Switzerland during the same time. In fact, we see that work opportunities remain significantly depressed, with an estimated 67% reduction in workers in the year after the transition. Demand for deliveries has also been greatly reduced, with orders down an estimated 42%, due to higher delivery fees and longer waiting times.

We study the impact of reclassification by comparing trends in Geneva to those in Lausanne, which is a comparably-sized, nearby Swiss city that was not subject to the ruling. Lausanne was chosen as a benchmark as it is the Swiss city that had the most similar trends to Geneva in the year leading up to the regulation, allowing us to most accurately isolate the impact of reclassification (see graph).

In the graph below, we plot delivery growth in the two cities, beginning a year ahead of the Geneva reclassification. As soon as Geneva couriers are reclassified on September 1st, 2020, the two lines diverge sharply, as Geneva’s deliveries are immediately reduced by 34% week-over-week. Over the year that follows, we see that Geneva deliveries do not recover relative to Lausanne. Instead, deliveries remain significantly lower, ending the year at 42% less than the estimated counterfactual.

In most places, Uber’s delivery marketplace balances supply and demand in real-time by use of dynamic pricing, and by enabling couriers to log on and off the app as they please. But by converting independent couriers to employees, who are guaranteed a fixed wage and scheduled for shifts weeks in advance, the fleet company, like any employer, had to forecast its demand and labor supply needs. This forecasting is what causes the initial dips in active couriers and in volume, but as we can see from the plots, both metrics have remained substantially depressed over the year following the reclassification, meaning that the fleet predicted the long-term impact on the market reasonably accurately.

Had couriers in Geneva not been reclassified, and deliveries had continued to grow in line with those in Lausanne, couriers in Geneva would have completed 694,000 more deliveries in the year following the change. We estimate that these deliveries would represent approximately 17 million CHF/€16 million in revenue for restaurants,1.23 million CHF/€1.16 million for couriers, and over 600,000 CHF/€570,000 in VAT revenue for the state.

As a further sense-check, we can also compare Geneva to the rest of Switzerland combined. Here, the trends are not as close in the pre-period, but there is still a clear, large divergence that happens after September 1st 2020.

The trends are even starker when we look at the number of couriers active on the platform. Employment status limits the availability of work opportunities for two main reasons. Firstly, as shown above, demand has been severely curbed, meaning that there are fewer deliveries for couriers to fulfill and so less work to go around. Secondly, the structure of employment status incentivizes fleets to concentrate work among fewer workers to manage costs that are fixed per employee.

In Geneva, we see this effect in the sharp decrease of couriers active on the platform, with a week-on-week reduction of 35%. This effect is compounded when we look at active couriers over a longer time period, as fleet partners tend to use the same couriers from one week to the next. Had growth continued in Geneva at the same pace as in Lausanne in the year following reclassification, there would have been three times the number of active couriers in Geneva, for an additional 2,000 work opportunities. These foregone opportunities include the approximately 1,000 that were lost immediately after the model was switched in September 2020, and an additional 1,000 that never materialized as growth in Geneva remained artificially depressed in the year following the change.

The flexibility enabled by the independent contractor model is consistently the top reason independent couriers and drivers give for working with Uber¹. This model unlocks opportunities for workers who otherwise might not have even joined the labor force, as flexibility is a prerequisite for them. It is therefore interesting and disheartening to note that a new survey found that 79% of all couriers who lost access to the app in September 2020 remained unemployed 6 months later.

Considering this long-term loss in earnings opportunities, in combination with the 2,000 foregone work opportunities, the decreased job satisfaction of those employed, and the lost revenues for local restaurants, we clearly see that reclassification achieves the opposite of what it intends. Still, these learnings from one city offer us and policymakers across the world the chance to do better — by looking at new ways that combine flexibility with increased protections, that offer access to more rather than fewer people, and that ultimately benefit workers and local economies.

¹This September 2020 survey of French delivery drivers found that 72% considered flexibility and independence to be some of the most important aspects of their work with Uber Eats.

This July 2020 survey of U.S. drivers and delivery people found that:

• 86% chose app-based driving was to have flexibility in their schedule
• 86% would no longer be able to drive if it didn’t offer a flexible schedule

This 2020 survey found that Eats couriers in Geneva Switzerland, who were forced by the local courts, to become employees strongly disliked the change:

• 72% of the couriers hired as employees reported they preferred working independently.
• 62% of converted couriers who felt they were worse off due to the change cited no longer being able to choose their own schedules.

This 2020 survey of UK drivers found that 89% of drivers said that flexibility was the most important reason they choose to drive using the Uber app