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Uber and Airbnb: Who really benefits in the 'share economy'?

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Uber drivers protest unfair wages in America (Screenshot via YouTube).

The share economy is a façade that allows companies such as Uber to flaunt social values at the cost of fair wages, writes Sochanda Thach.

WITH RISING CONCERNS about sustainability and wastage, today’s generation looks to the sharing economy as a norm rather than a trend.

People are moving away from hyper-consumerism and towards collaborative consumption — but can we actually call the sharing economy "sharing"?

First, what exactly is the sharing economy and how does it work?

The sharing economy, or collaborative consumption, takes a new approach to traditional consumerism. The current concept takes a hybrid form of ownership and renting, whereby those with the goods and/or service “share” with those that need it — for a price. It’s not a new idea. However, with the provided convenience of the internet, everything is made more accessible. Companies such as Uber and Airbnb are classic examples of the sharing phenomenon.

These Silicon Valley projects utilise current technology – such as smartphones – and act as the middlemen between their consumers. The competitive advantage these businesses possess is their commitment to providing convenience at lower prices with “social value” principles. Behind the sharing façade, it’s a classic case of economic exchange — if you ask me.

Seeing how collaborative consumption has been popularised recently, there is still a lack of government regulation. Internet companies working behind the sharing economy often undercut costs by creating their own terms and conditions, thereby exempting them from bylaws which were intended for your classic brick-and-mortar businesses.

The current Uber system is an example of companies legally designing their business to avoid costs such as taxes, insurance and fair wages. This billion-dollar company gets away with breaking laws as they claim only to be a piece of software simply acting on behalf of their drivers. But even their drivers aren’t considered employees, only independent contractors.

Uber drivers in Australia earn below the minimum wage, without any contribution to their superannuation. Uber has total control over fares rates and takes 25 per cent of driver’s remuneration. Driver “partners”, as Uber calls it, are also made to supply their own car for work and pay their own maintenance costs, such as petrol and insurance. And so far, the Government can’t stop them. The Fair Work Commission ruled in favour of the ride-sharing company and denied any employment relations between Uber and their driver partners.

Not only does the current commercial sharing system lack regulation, there have been cases of taxation avoidance. One most prominent case is Airbnb, who have been under litigation in regard to the very issue. Government bodies have been cracking down on the laws concerning short-term holiday letting. However, the accommodation marketplace is designed to operate in grey areas. Airbnb hosts are controlled under a commercial agreement. In certain jurisdictions, the company outlines local occupancy taxes, but, in some cases, landlords can evade taxes, such as the goods and services tax and capital gains tax.

There is no doubt the world is evolving and moving towards the shared economy — or, a more accurate term, an access economy. So, it is only right that government policies are updated to regulate the rise of collaborative consumption. Whether it is good economic stimulation in a social sharing aspect, only time can tell.

Sochanda Thach is in her graduate year of university at RMIT.

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Uber and Airbnb: Who really benefits in the 'share economy'?

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