11 MIN READ
One of Nepal’s most popular new companies faces scrutiny, and employee ire, for what many say are exploitative business practices
It was Injol Shrestha’s last day at Shangri-la Development Bank. He had just resigned as a credit assistant in order to move to a new bank and had one final interview slated for later that day before he got the job. It was September 16.
“It was a big day in my life and for my career,” said Shrestha.
After handing over responsibilities at his office in Baneshwor, Shrestha booked a Pathao motorcycle ride to Kumaripati, where he was scheduled to appear for the interview. But en route, at Kupondole, his Pathao ride struck another bike and Shrestha was thrown to the ground, suffering serious injuries to his neck, head, and legs.
Twenty-five-year old Shrestha, a middle-class migrant from Biratnagar, suddenly had hospital bills that totalled over a hundred thousand rupees. He attempted to contact Pathao, believing that they would have an insurance policy in place to deal with cases like his.
“They refused to help, saying they were not liable for any damages,” said Shrestha.
A day after the accident, the Pathao rider too stopped answering his calls. With nowhere to turn and few savings of his own, Shrestha was forced to borrow money. He has since spent Rs150,000 on his treatment.
Shrestha, who still needs crutches to get around, has now become the face of growing protests against Pathao, the multinational ridesharing company that is headquartered in Dhaka, Bangladesh. The protests, led by its own riders, are demanding changes in the company’s insurance policies and rider compensation, among other things.
“I am fighting for this cause because I don't want anybody else to suffer like I did,” said Shrestha. “We need proper policies to safeguard the rights of riders and passengers.”
Under existing laws, Shrestha’s treatment costs should have been covered by the transport company’s insurance. According to Clause 13 (4) of Bagmati Province’s Road and Traffic System Act, any public transport company — whether those operating four-wheelers or two-wheelers — are required to provide insurance coverage for their passengers. But up until very recently, Pathao had no insurance for its passengers, a clear violation of the law.
The protests aim to hold the company to account, not just for its employees but also its customers, as transport companies are required to do. For over a week now, hundreds of riders affiliated with Pathao have been protesting, demanding better benefits and a wider safety net for riders. Protestors have put forth an 11-point demand, which among others, asks the company to meet the following demands: reduce Pathao’s commission from 20 percent to 8 percent; provide proper insurance coverage; stop penalising and suspending riders without prior notice; provide a toll-free number for riders; and exempt riders from donning the company-mandated ‘protective gear’.
According to riders, Pathao charges an exorbitant commission of 20 percent on all ride fares while taking disciplinary action and issuing penalties without any prior notice or explanation. The riders also allege the company is push-selling what it refers to as ‘PGS’ — the company’s equivalent of breathable protective gear (BPG), essentially a jumper with the Pathao logo. Riders have to shell out Rs 2,000 for the gear, as the company has made it mandatory “for protection and safety”.
But riders say that the gear has more to do with advertising the Pathao brand rather than providing any kind of protection. Three of the riders that The Record spoke to said that the outfit is uncomfortable due to its awkward fit, and unhealthy too.
“It [the jumper] gets so dirty in just a few hours that one passenger asked me to remove it before getting on. But the company insists that we wear it,” said one rider who spoke on condition of anonymity out of fear of disciplinary action.
The fear of arbitrary dismissal is warranted, say riders, as the company consistently suspends its riders without providing any reasons. Some have even faced lifetime bans.
On December 28, dozens of riders had gathered in protest outside the Pathao office in Baneshwor. While a few riders were inside holding talks with company management, the protest turned violent. Projectiles were hurled at the office and its gate was smashed. While some Pathao riders say that those unaffiliated with the protest had begun lobbing stones, the police later arrested 26 protesters.
“We did not go there to vandalise the office. We just wanted to talk,” Padam Rokka, a protester, told The Record. “But the crowd got agitated when Pathao representatives walked away mid-conversation without listening to us. That’s when some people started throwing stones.”
By the time of the protest, Pathao had already agreed to some of the protestor’s demands. In a statement released on December 23, the company had said that both riders and passengers would now receive insurance coverage of Rs 500,000 in case of death or disability, and up to Rs 100,000 in case of an accident. The company also promised that it would set up toll-free numbers for riders and would attempt to provide prior notice on disciplinary action.
But the company has refused to cut the commission it takes. Pathao charges a flat rate of 20 percent on any and all rides while its primary competitor, Tootle, previously charged a staggered commission rate — 20 percent on the first four rides and 5 percent after that. Since October 2019, it has stopped charging any commission, according to Tootle co-founder Sixit Bhatta. Pathao has also ruled out the possibility of reviewing its incentive schemes for riders.
The protestors have vowed to continue with protest even as Pathao refuses to budge any further. In a December 30 interview, Asheem Man Singh Basnet, Nepal representative for Pathao, argued that the company could not meet all the protestors’ demands made by the riders as Pathao is only a platform that connects riders and users, without any legal obligation to either party.
Basnet was unavailable for comment when contacted by The Record as he was on vacation with his family.
In the same interview, Basnet also suggested that the protests could have been orchestrated by outside interests. Basnet said that some protestors had only signed up with the company a few days ago while a few others had been issuing veiled threats.
But the police have not found any evidence to substantiate Basnet’s claims that the protestors are “outside” elements.
“One protester arrested was not affiliated to the company but all others had worked for Pathao at some point in time,” Deputy Superintendent Daksha Kumar Basnet of the Baneshwor Police told The Record.
Of the 26 arrested, the police have released 21 but filed vandalism charges against five.
As the standoff continues, numerous theories are playing out on social media platforms. With the news media largely focused on the vandalism at the Pathao office, the heart of the protests — the grievances of riders against a company that its own employees accuse of being unfair — is being lost. Some say the protest is the result of long pent-up anger among riders and passengers who feel the multinational company has grown rapidly at the expense of poorly compensated riders.
In Pathao’s business model, say protestors, the risk-reward equation disproportionately favours the company. The riders themselves have to account for their bike’s wear-and-tear and the mileage logged. They also have to pay for the fuel. In contrast, most taxicab owners, not the drivers, pay for the vehicle’s upkeep and maintenance. Once all associated expenses have been deducted, along with the 20 percent commission, riders end up with very little. A similar story has long been playing out across the world with companies like Uber.
There are also some who believe that taxi drivers could be behind the protests. Nobody has suffered as much as taxi drivers have from the ascendance of ridesharing companies like Pathao and Tootle. After seeing a gradual decline in customers, some taxi drivers have signed up with ridesharing companies. In the age of digital disruption, this is an all-too-common story.
Krishna Upreti, who recently left the taxi business after two decades in the industry, says that the taxi business is on the verge of collapse.
“There is no way that we can compete with the ridesharing businesses due to the high costs associated with taxis,” said Upreti, who is also the former president of the Machhapokhari Taxi Entrepreneurs Association. “The sector was already struggling due to the government’s reluctance to raise the meter rate. Then came the ridesharing business.”
The trouble brewing at Pathao, however, represents just the tip of the iceberg of the larger problems facing the ridesharing industry, which remains largely unregulated despite the thriving business its companies are doing.
Over the years, the ridesharing sector has emerged as a significant disruptor in Kathmandu’s public transport. The tech-savvy younger generation has quickly adopted apps like Pathao and Tootle that provide transport that is more efficient than buses and cheaper than taxis. Pathao, which calls itself the biggest and most popular ridesharing service in Kathmandu, has around 75,000 registered riders and 1.2 million customers. These apps have also been hailed for providing employment, whether part or full time.
“People of all backgrounds with valid licenses and bikes are working for ridesharing companies because the job-enrolment process is so simple,” said Shankar Bhusal, who works full time as a Pathao rider.
But the ridesharing business, much like others in Nepal, lacks transparency, and there is very little data in the public domain regarding its modus operandi. Of Pathao’s 75,000 riders, around 7,000 are active employees who provide thousands of rides each day, according to Basnet.
In a very short time, ridesharing companies have managed to earn enormous public trust. Tootle, the Nepali startup, began operations in January 2017 while Pathao, the Bangladeshi company, entered Nepal in late 2018. In fact, no private business has arguably enjoyed greater public faith in such a short time as these ridesharing companies. That’s the chief reason these companies remain in existence, despite the lack of clear regulations. In November 2019, the government pursued legal action against Tootle for evading taxes and carrying passengers without the proper transport permits, placing a temporary halt on its services. The public outrage was loud and swift, and the government was forced to allow Tootle to resume services.
In February 2020, the Patan Appellate Court ordered the government to formulate laws necessary to govern ridesharing, but work has yet to begin as policymakers remain undecided on whether ridesharing businesses should benefit from the subsidies that prop up the larger public-transportation sector.
This delay has led to numerous problems. While on the one hand Tootle and Pathao function under threat of legal action, employees, on the other, are prone to exploitation. Insurance companies too have also not been able to draw up proper policies.
Because they operate in such a grey area, many riders who have met with accidents languish for weeks or months in jail without any support, unlike taxi drivers and bus drivers who have unions.
Riders also allege that Pathao shows little concern for its riders, despite building a company on their backs. On December 24, Pathao rider Pawan Khadka was beaten and robbed by a passenger in Galkopakha in Kathmandu. After the company did not respond to their calls for help, fellow Pathao riders raised money for Khadka’s treatment at the National Trauma Center. They also picketed the police office, demanding that the culprit be arrested.
Not all riders are upset with Pathao. Many continue to pick up and drop off passengers, welcoming the extra income. Sonam Bhote, a father of three who has been working full time for Pathao, believes that the riders should resolve their problems through talks instead of resorting to vandalism. But he admits that Pathao could do better in ensuring better rights and facilities for its riders.
“I have been able to spend freely on my family and children ever since I started working for Pathao. I guess it's the same for many others. Disrupting or shutting down the business cannot be a solution,” Bhote told The Record.
But for others, it is not so easy to move forward. Since his accident in September, Shrestha has been doing everything he can to hold Pathao to account. He has filed a case with the police, spoken to the media, and has taken part in several protests, all without much success. But with the renewed debate over Pathao’s culpability when it comes to the safety of its riders and its customers, he remains hopeful.
“The growing support for riders has shown the urgent need for the creation of policies that benefit everyone, not just the company,” said Shrestha.
CORRECTION: This article has been updated to reflect the fact that Tootle, since October 2019, has not been charging its riders any commission.
22 min read
Throughout Nepali history, the brutality of the caste system has stunted social transformation
5 min read
Determined to crush Maoist rebels instead of seeking a political solution, Oli is repeating the same mistakes Deuba made in the 90s which resulted in a decade-long people’s war
5 min read
While all vaccinations so far have been the Oxford-AstraZeneca vaccine, Nepal will now be rolling out the vaccines from Sinopharm
8 min read
While journalists suffered through pay cuts and layoffs, media houses lost billions in revenue, financially squeezing the media industry.
4 min read
A Chitwan hospital has begun antigen tests, pre-empting the government’s directives
3 min read
Nepal’s migrant laborers are particularly vulnerable to the Covid19 outbreak in the absence of basic healthcare or job security.
3 min read
The tradition has drawn criticism from child-rights activists who say the Kumaris are denied a childhood.
4 min read
Misinformation regarding the vaccine’s side-effects is spreading and without a concerted counter campaign, such false information will only proliferate.