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Taxi Drivers Strike On Strike Business Essay

Paper Type: Free Essay Subject: Business
Wordcount: 3810 words Published: 1st Jan 2015

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City Taxi was established in 1982. The cooperative is managed by three – members board of directors, elected by general assembly and is led by the chairman. The activities are controlled by three member supervisory board, which is also elected by the general Assembly. As a result of continuous development the company now has 825 sub contractors and the cooperative are more than 400. City Taxi was the first company to introduce vehicle services in UAE.

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Taxi drivers at City Taxi’s are independent business operators who drive passengers from place to place for fees. 30% of per day collection is for the taxi drivers & 70% is for the taxi company. They are not direct employees instead they pay City Taxi fees to cover services such as dispatch & sometimes rental fee for car. Working independently means taxi drivers get as much as out of the business as they put in. They can work as many hours they want but must cover their own operating cost. Owing to its effective regulation and sufficient staff, City Taxi arrives at the relevant address fast & accurately. When looking for a job, a person looks for long term career development, positive environment & enhances professional experience with a good salary package. City Taxi does provide all this to their employees.

New taxi drivers are accepted on the basis of a waiting list system. In each case, the company selects the drivers who have employed by a Taxi Company for at least two years, posses at least basic level foreign language skills and have successfully passed an exam in city orientation. A further requirement is that their history and personal data should be provided for verification.

In the following pages, we will be introducing City Taxi’s new policies and how it has been creating problem to the Taxi drivers as well as analysis advantage & disadvantage of this policy to the Taxi Company as well as the Taxi drivers. At the final stage of the report we will be providing some suggestions in the form of plans that can be beneficial and would please everyone relating to the organisation.


In 2010 Fuel prices went very high in United Arab Emirates. This affected normal residents as well as many organisations in UAE. This fuel prices affected Taxi companies & Taxi drivers who earn their living through this medium. City Taxi as well as the other companies were unable to cope with the recent hike in fuel prices. City Taxi appoints drivers for providing car services. The Taxi drivers are given a daily target & out of this daily collection 30% is the commission for the Taxi drivers. The fuel for the services as well as cars & its maintenance is provided by the Taxi Company. The increase in fuel prices in UAE imbalanced the whole system of Taxi companies. City Taxi as well as other Taxi companies requested Sharjah Transport Corporation to increase the Taxi fares as the Taxi companies are suffering loses & could not meet their needs [ [1] ].

To neutralize this issue the Sharjah Transport Corporation increased the Taxi fares. After the increase in fare Passengers were unhappy as the Taxi fare was increased to Dhs.1 for every 650 meters & the minimum fare was Dhs.10 [ [2] ]. They also announced that additional new services will be introduced for better service & good insurance policies will also be introduced which will help passengers as well as drivers. The hike discouraged people further from using taxi for short distances as they have to pay a minimum of Dhs.10 for the trip. The residents expressed discontent over the increase in minimum taxi fare as it increased the overall expenditure of common public per month. This encouraged many of them to use public transport which adversely affected the taxi company as they started losing potential passengers. The potential passengers preferred other means of cheaper transportation system. The Taxi’s have to constantly move to get passengers from different areas but due to the hike in fares people are not interesting in using taxi. This leads to decrease in number of potential passengers. This started affecting Taxi Company as well as the drivers. To get passengers drivers need to keep on moving which again resulted in wastage of fuel. Taxi’s moving around the cities without passengers again affected the Taxi Company. These also affected the taxi drivers as they could not meet their daily targets & this resulted in low wages. So some taxi drivers started switching off meters & started providing taxi services for low fares. This allowed profits for taxi drivers but heavy lose for taxi companies.

The main reason to increase the fare was to compensate for the company’s lose, due to increase in fuel price but this adversely affected the taxi company as well the taxi drivers. Later City Taxi Company with the permission of Sharjah Transport Corporation announced a new policy that they will deduct 0.52 fils against every kilometer without passengers apart from their daily Targets. The Taxi drivers were unhappy with this policy & many of the Taxi drivers preferred to leave the company & many went on strike. Due to this new policy a driver who was earning an average monthly salary of Dhs.2700 ended up getting Dhs.1000 which is not enough to survive in UAE market where the cost of living is very high [3] .

Taxi drivers spend all time behind the wheel and they have to cope with poor weather & bad driving conditions. They also have to deal with difficult passengers. The situation of Taxi drivers are really pathetic as they have to work for long hours to achieve their targets, they don’t get breaks on public holidays like other employees, inspite of long hours of work the wages are low & the cost of living is high.

Mrs. Ashraf is one of the Managers that work at City Taxi. He says that due to the implementation of new policy many of the Taxi drivers have resigned & many of them are on strike. Taxi drivers associated with the Taxi Company are depressed & the environment has become dull & demotivating. He also said that it will take a lot of time for all the drivers to get use to this new policy as their working hours have increased but these long hours are not helping them to earn a proper income.


To analyze this problem, we need to study the new policy implemented by City Taxi. We need to study the advantages & disadvantages of this policy and need to further analyze whether this policy will be effective & will it achieve the targets set. A comparative study needs to be done to understand the problems & issues faced by the Taxi Drivers as this policy affects them the most.

The new policy introduced will have its own effects. Let’s analyze its advantages & disadvantages and the most important one’s are as follows:


Improved quality of service:

As earlier mention Taxi companies have already said that the price hike in fare was to provide improved quality of services for the passengers. To provide good service & they have introduced some special services as well. These services are as follows

The taxis can be booked at any time of the day or night. This will help the passengers to avoid waiting for the Taxi’s.

New Taxis will be introduced to meet the demands at peak time.

For disabled passengers special service will be provided. Companies will be introducing modified vehicle’s fitted with ramps & high ceiling, allowing wheelchairs to be locked. This will make life much favorable for disabled passengers.

Stress free environment & safe driving will be assured by the company.

Prompt training sessions will be provided that will create an easy communication environment for the passengers.

Taxi will be assured with a clean environment & will be driven by skilled professionals.

As the company is planning is provide better service this will allow them to retain the potential passengers.

Better Insurance system:

Depending upon the policy the benefits will differ:

Protection against the liabilities: This policy is designed to offer vehicle operators and owners protection against liabilities resulting from accidents

Protection against accidental loses: This policy protects against incidental losses resulting from events such as theft of vehicle or fire damages etc.

Comprehensive protection: This policy protects against damages resulting from Vandalism & environmental factors.

Policy for the Taxi drivers: This policy will help them to cover physical injury or even loss of life.

This insurance policy will help passengers as well as Taxi drivers.

Wastage of fuel can be avoided:

As the taxi drivers have to pay additional amount per kilometer without passengers they would try their level best to stop running the taxi without the passengers which will result in saving fuel.

Profit for Taxi Company:

The new policy will benefit the company more as if the drivers are moving around without passengers the company will benefit due to 0.52 fils deduction per kilometer. If the drivers have got potential passengers it will still benefit as the minimum fare has changed & 70% of the daily collection is for the company.


No potential customers:

Due to recession in UAE cost of living has increased but people in UAE did not get additional salary benefits. To survive here they are trying their level best to cut short their additional expenditure. The increase in fare cost & minimum charges definitely have encouraged them & this will reduce the number of potential passengers. They will prefer less comfortable transportation modes like buses & metros as the fare for them is much cheaper than the Taxi systems.

De – motivation:

Change in cost of taxi fares & additional deduction per kilometer might really demotivate the drivers. The drivers have to work for long hours to meet their daily targets with low wage level. This will definitely de – motivate the drivers to work honestly.

Motivate to opt for another job:

As this new policy affects Taxi drivers the most they would prefer looking for other job options that can provide them better basic incomes. They will definitely look out for jobs like schools bus drivers, private drivers at home or drivers at companies which will provide a better salary package & improved living.

Unsafe Driving:

To reduce the number of working hours or to meet their daily targets the taxi drivers may move around cities at very high speed. This leads to unsafe driving & more changes of accidents. This affects the passengers as they will be unsatisfied with the service as there will be a risk in using Taxi’s.

Drivers may cheat:

The taxi drivers may cheat the Taxi Company by providing share taxi system. They may pick 2 passengers at one time & provide them reduction in meter fare. This will benefit Taxi drivers & passengers but not the company. They may not use meters (switch off meters) & will give passengers ride & will charge the passengers less than the actual fare which will cost the passenger less than the actual fares. Definitely the passengers will agree to this situation. The drivers may turn on the meters at the start of the trip & then cover it at some point of the trip & may pretend to accidently shut the meter such that they can make up their own fares to the passengers.

Poor service:

Taxi drivers will not prefer passengers who want to travel long distance. If they opt for such passengers they will have to travel for long hours. If they choose passengers who want to travel short distance this will benefit them as the minimum charge is Dh.10. This will be more beneficial to meet their daily Targets. This will lead to poor service as the passengers will have to wait long hours to get a taxi.

By carefully analyzing this policy we come to a conclusion that it has got more limitations & this affects the taxi drivers than the company. We need to analyze this problem further besides depending merely on advantages & disadvantages. We need to analyze the reactions of Taxi Company & Taxi drivers to this policy.

The Taxi Company will be pleased with the policy as this will enhance the company’s image of providing better quality services & at the same time they get the required benefits but the drivers will not be pleased with this new policy as it affects their working hours & their monthly income. The Taxi Company will welcome this policy & on the other hand customers & drivers may feel cheated this will demotivate them.

In conclusion this policy has proved to achieve the targets of the Taxi Company but not to the Taxi drivers & their family as this policy is not providing the drivers what they deserve though the company has offered better insurance system this will help them to improve their monthly incomes. Therefore we come to a conclusion that the policy has good aspects but needs to be slightly improvised to overcome the negative aspect of the policy.


Implementing this policy was discouraging the Taxi drivers to work as drivers for their living. This will result in high level of employee turnover as they are not motivated to work in this company. The Taxi companies function due to the Taxi drivers & if the drivers are not interested in maintaining this as their profession then it would be difficult for the Taxi Company to run their business.

To avoid this situation we came up with some solutions & again each solution will be analyzed based on advantages & disadvantages for the Taxi drivers as well as the Taxi Company. Each Plan needs to be analyzed properly & the impact of each plan has to be studied.



According to this Plan the taxi drivers will be given 70% & the Taxi Company will be given 30% of the daily collection. The Taxi fare can also be reduced to Dhs.8. But the deduction of 0.52 fils against every kilometer without passengers will be valid but fuel for the Taxi should be added by the Taxi drivers itself and the insurance Policies should be provided by the Taxi Company. This policy should definitely sort-out the issues that Taxi drivers faced. The taxi drivers pay for their visas & certain rental fees to the company. This plan will bring good income options for the drivers which can be used for their expenses. But this Plan may not satisfy the Taxi Company as they would be getting only 30% of the daily collection which would not be enough for their expenses to run the company. The Company provides the taxi drivers with the vehicles so they will have to provide the passengers & Taxi drivers with the insurance policy. As the vehicles are constantly being used they will require maintenance & repair which is to be provided by the Taxi Company. The 30% collection will not serve the purpose of the Taxi Company.

This Plan will allow the Taxi drivers to overcome their issues. The reduction in taxi fare will encourage passengers to use Taxi.

The predicted outcome of the implementation this new policy is as follows.


Taxi Company:

Taxi Company will not have to pay for the Fuel as the fuel will be added by the Taxi drivers. The fuel charges keep on changing but these changes will not affect the Taxi Company.

Taxi Drivers

Taxi Drivers will be getting 70% of their daily collection which gives a good income option for them.

Taxi drivers will be getting insurance policy which will be an advantage for them incase of accidents or medical issues etc.

Taxi drivers will only require less number of hours to achieve their daily targets.

Advantages for Taxi Company & Taxi driver

Taxi Companies as well Taxi drivers will gain profit as the Taxi drivers will have potential passengers.

Fare reduction will encourage people to use comfortable modes of transportation like Taxi’s rather than using cheaper transportation systems.


Taxi Company’s:

The company will only be getting 30% of the daily collection which will make it difficult to manage their expenses.

The company will also have to provide the Taxi drivers & Passengers with insurance that will be another expense for the company.

Taxi Drivers

Taxi drivers may not be happy with the 0.52 fils deduction as they have to keep on moving to get passengers.

They may also be not happy as they have to pay for the fuel which can be expensive as the fuel charges keeps on increasing.

Disadvantages for Taxi Company as well as Taxi drivers:

Dhs.8 as minimum fare may not be acceptable to many passengers with low income.

As there are many other modes of transportation available for long & short distance cheaper than Taxi passengers will be opting for such modes of transportation.


According to this Plan the taxi drivers will be given 40% & the Taxi Company will be given 60% of the daily collection. The Taxi fare can also be reduced to Dhs.6. The deduction of 0.52 fils against every kilometer without passengers will be valid. The fuel will be provided by the taxi company but the expenses for the visa & other paper fees will be shared by the Taxi company & taxi drivers. The company will also have to provide some insurance policies to the drivers. This plan can improve the economic conditions of both Taxi Company as well as Taxi drivers. There are many benefits for the Taxi drivers according to this policy as they will get 45% of daily collection, will get insurance policies, the company will also be sharing the cost of visa, 0.52 fils deduction system is not more valid etc. This will help the taxi drivers to improve their living situation.

The taxi company may not be very happy with this policy which gives them only 60% of the daily collection which is less than the current percentage. But with this policy the company can manage their expenses.

Before the implementation of this Policy both sides need to be analyzed. We need to analyse the purpose & benefit of this policy. This predicted outcome of implementation of this plan:


Taxi Company:

The company will be getting 60% of the daily collection as well as the amount received by the deduction of 0.52 fils per kilometer.

Taxi drivers:

The Taxi drivers will be receiving 40% of their daily collection which will help them to meet their expenses.

Another benefit is that the company will be sharing the visa cost with the taxi drivers.

Policies will help drivers in case of accidents & other issues.

Fuel cost will be provided by the taxi company.

Advantages for Taxi Company & Taxi driver

As the minimum charge is reduced people may prefer using comfortable transport service so this definitely will help company & drivers to earn profit.


Taxi Company

Taxi Company will have to pay for the fuel charge that keeps on changing.

They will have to share the visa cost of the taxi drivers which can be quite expensive for them.

The daily collection percentage according to this policy is less which can affect the company’s profit.

Taxi drivers

Drivers may not be satisfied by the 0.52 fils deduction system.

Disadvantages for Taxi Company as well as Taxi drivers:

Some class of Passengers will still feel that the minimum charge introduced is high & may prefer cheaper modes.


In Plan C we approach the problem from different angle. The current policy should be revoked. In addition to that a few minor things can be changed. Let the minimum charge for fare be set to the previous charge. Let the 0.52 fils be still imposed. The company can raise the commission of the Taxi drivers from 30% to 35%. This will improve the economic condition of the Taxi Company as well as the taxi drivers. More potential passenger will be choosing taxi as a medium for travelling.

The predicted outcome of the implementation of this policy:


Taxi Company:

Taxi Company will be satisfied as they will earn profit as taxi drivers could meet their daily targets due to reduction in fare.

If the Taxi is running without passengers it will still profit the Taxi Company due to 0.52 fils reduction system.

Taxi drivers will consider not to waste fuel (will not travel without passengers) as it will lead to reduction from their pocket.

Very less chances of drivers to cheat

Taxi drivers:

Taxi drivers will be satisfied as they will have potential customers.

Taxi drivers can easily find passengers as they will be moving.

Taxi drivers will be motivated as they are provided with better economic conditions.


Taxi Company:

Taxi Company may not be satisfied as they have to raise the taxi drivers Pay as well as reduce the minimum Taxi Fare.

Taxi Drivers:

Taxi drivers may not be satisfied with 0.52 fils deduction.


If I was in a situation that I had the ultimate power & control over the situation then I would have revised the implementation of deduction of 0.52 fils. I need to analyse the main intension of the implementation of this policy. Need to understand the necessity to implement this policy. If this policy is not introduced then is the Taxi company suffering loses. Are the Taxi drivers struggling for living due to this policy?

After analyzing the entire solutions provided, the best option is to opt for Plan B or Plan C as it will reduce the issues of drivers as well as the Taxi Companies. This Plan can achieve the goals intended without demotivating the workforce.



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