Unfair Competition

“Competition is not only the basis of protection to the consumer, but is the incentive to progress.” The words of Herbert Hoover which while generally acknowledged to be true, are inevitably of little comfort to whichever group is suffering the icy winds of competition at any particular time. And this time it is the taxi drivers of Poland who began protests to demand that cheap competition be restricted.

The protests were held in Warsaw, Łódź, Poznań and Wrocław, with drivers announcing that they would drive in convoys at low speed, exacerbating morning rush-hour problems. Jarosław Iglikowski, the head of the Warsaw Taxi Drivers’ trade union, said more than 2,000 drivers were taking part in the Warsaw protest. He said the protests were not just about the popular Uber platform – against which there have been protests elsewhere in Europe – but also over other carriers which the taxi drivers claim are operating unlawfully. The drivers planned to hand in petitions with their demands at the Prime Minister’s Office, the Ministry of Infrastructure and Construction, and the Ministry of Finance. The protest was scheduled to end at around 1 p.m.

It may seem an odd way of protesting. By inconveniencing the very folk on whom the taxi drivers rely for income and driving many of them into the eager embrace of Uber, which was no doubt delighted by the opportunity for some surge pricing, the taxi drivers have hardly advanced their own cause and will have lost some passengers to Uber for good. But do the taxi drivers have a point?

In any regulated market, those that have paid to access that market whether by way of licence fees, the need to comply with certain minimum standards of training, employment regulations or whatever, will rightly feel aggrieved if others are able to access the same pool of customers free of the costs which are imposed on licensed operators. On the other hand, it may be argued that Uber offers a better service. It is easy to order, there is a map of the journey and, surge pricing apart, the fare is very competitive. Reliant as they are on GPS, Uber drivers sometimes take slightly unconventional routes, but that apart the service is generally very good. After all, there is nothing to stop conventional taxi firms offering similar technology, as some do.

And it is not only taxis. Polish international transport companies are set to protest against a decision that would result in drivers working abroad being paid more. The European Commission said that drivers who spend at least three days each month in a different country should be paid that country’s minimum wage. This could make Polish companies less competitive and Poland’s Infrastructure Minister Andrzej Adamczyk said Poland would seek allies to help block these proposed changes, which “directly hit the international transport sector, not only in Poland … but in all of Europe”.

The head of Poland’s International Association of Road Carriers Jan Buczek said: “The [Polish] transport sector is very worried by the fact that the European Commission, which we thought was a guardian of order in the European Union … is in fact inclined to give in to pressure and lobbying by rich countries … rather than doing everything so that the basic rules of the game in the EU be upheld”. The European Commission’s decision follows lobbying from France and Germany that they were being undercut by Central and Eastern European rivals. Although France and Germany introduced new laws to ensure that foreign drivers are paid according to French and German minimum wages, last year the European Commission decided to take legal action against them, saying that paying foreign drivers the minimum wage from day one was “disproportionate”.

Poland is part of the EU’s single market, so it should be able to take advantage of lower wage rates to win business but what about countries whose lower costs are based not only low wages but on a virtual lack of any form of employee protection, for example. Should goods which are made under conditions which would simply not be acceptable in the EU be allowed to be sold in EU markets to the detriment of producers who are based in the EU. If yes, how do we avoid a race to the bottom and mass unemployment as workers compete for fewer jobs at lower wages while the true cost savings are seen in the wealth that accumulates in ever fewer hands. Globalization and technological advance have brought many benefits, but also new problems which need to be addressed.

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