2 days ago
Why ‘dynamic pay' is the new way to rip you off
Workers are having their wages cut by new 'dynamic pay' schemes, unions and academics have warned.
The practice of surge pricing came under fire after firms used demand to drive up the cost of Oasis reunion tickets. Some gig-economy workers, including Uber drivers and Deliveroo workers, are having their own problems with surge pricing, because their pay is adjusted based on real-time demand.
The pay models are based on algorithms. Instead of receiving a predictable, formula-based fee per task, workers are being offered personalised payments for each job.
A University of Oxford study published in June found that Uber's 'dynamic pay' system, introduced in 2023 and which alters pay as well as passenger fares, is cutting driver earnings on higher-value trips.
Unlike the familiar surge pricing that bumps up fares during busy times to get more drivers on the road, the 'dynamic' system also tweaks how the fare is split, often meaning Uber takes a bigger cut and drivers end up with less.
Reuben Binns, an associate professor at Oxford's Department of Computer Science, said: 'The higher the value of the trip, the more of a cut Uber takes. So the more the customer pays, the less the driver actually earns per minute.
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'Workers try all sorts of things to cope — switching apps, refusing certain jobs, tracking their own data — but they're always a step behind the algorithm.
'Platforms are getting more secretive over time. They've moved from a relatively transparent system to a much more complicated one. If this model becomes widespread, it raises big questions about how workers can plan their finances.'
Katie Wells, an academic from Georgetown University in Washington DC who studies algorithmic pay systems, said similar models are appearing in other sectors, including healthcare in the US where nurses bid for shifts.
She said: 'Uber's personalised wages and prices echo what's happening with grocery prices, plane tickets, and other goods increasingly being priced with granular data.'
One London-based Uber driver, who asked to remain anonymous, said: 'I have noticed that our fares or the amount we receive have gone down. Plenty of the drivers I know complain that Uber is deducting more than expected. Many drivers are getting frustrated.
'One of my fellow drivers said he wants to quit Uber because he feels like it's tormenting him as he works so hard just to make £140 a day. I reject a lot of jobs based on fares now. You have to see what job brings you more money.'
The former Uber driver Ronak Kazi, 39, said the pay system often felt unpredictable. 'We would get very different amounts for very similar jobs,' he said.
Henry Chango Lopez, general secretary of the Independent Workers' Union of Great Britain (IWGB), said: 'The spread of dynamic pricing models should worry us all. These systems keep workers in a constant state of anxiety — forced to make hundreds of snap decisions a day without any transparency into how pay is calculated. It's not just that the game is rigged, it's that workers aren't even allowed to know the rules.'
Lopez said that many drivers were working 70-hour weeks under the model and still struggling to cover basic costs, noting that Uber's adoption of dynamic pay preceded the largest driver strike in UK history.
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The GMB union says the lack of transparency in how platforms calculate pay highlights the inequalities between workers and operators, increasing insecurity in already low-income roles.
Alex Wood, an assistant professor in economic sociology at the University of Cambridge, said: 'Platforms use dynamic pricing to manage supply and demand, but these systems are highly opaque. It's impossible for workers to know how much they will earn, causing insecurity and anxiety in a population where many already earn below the minimum wage.'
A Deliveroo spokesperson said: 'Our rider pay model is designed for flexibility and transparency. All riders have access to information on how orders are offered and how fees are calculated on our website. Riders have the freedom to determine when, where and whether they will work and earnings are measured based on factors such as the time riders spend on each order.'
An Uber spokesman said: 'We do not recognise the figures in this report. We're focused on offering people a safe, affordable and easy option to get where they need to go and are proud that thousands of drivers continue to make the positive choice to work on Uber as passenger demand and trips continue to grow.'
