Spain Ended Its Massive Taxi Strike Over Uber. But It Didn’t Solve the Problem

August 2, 2018, 12:04 PM UTC

Spain’s big taxi strike is over, for now, after the government said it would let local authorities make their own rules on licensing for ride-hailing firms. The country’s national taxi association, Antaxi, also said the government had agreed to its demand that drivers on platforms such as Uber and local rival Cabify should get only one operating license for every 30 given to regular taxi drivers.

The strike ran for six days until Wednesday, causing significant disruption across the country. It started when taxi drivers in Barcelona began a protest against a court ruling that rejected local rules on the issuing of “VTC” licenses to ride-hailing firms.

In a statement, the government said it proposed that Spain’s autonomous communities—its regions—should be able to set local rules in order to craft their local transport policies.

The government said the change would be implemented across the country during September. Taxi federation Elite Taxi responded by saying it would be back in touch in September to work out what comes next. If the new deal isn’t properly enforced, more strikes are likely.

One key issue here is that traditional taxi drivers in Spain have to make significant investments in their licenses, whereas VTC licenses are much cheaper. Meanwhile, taxi drivers are also unable to change their prices to effectively compete with the services offered through ride-hailing platforms, in order to recoup their investments.

Madrid taxi driver Raúl Herranz told Fortune that ride-hailing drivers get to change more at surge times, such as during music festivals, but taxis cannot. Ride-hailing drivers also then undercut taxi drivers at slower times, taking away more business. Herranz said he and his wife, who share their taxi, used to make €6,000 ($6,970) a month, but now make just two-thirds as much.

“We don’t understand why CNMC (National Commission of Markets and Competition) is defending the interests of platforms that pay taxes outside Spain and who contribute to a situation in which proper working contracts are increasingly more precarious,” complained a Barcelona driver, who did not share his name, before the government apparently caved in to the drivers’ demands. “What’s more, VTC license-holders don’t have the same working conditions as us because their licenses cost €35 whereas ours can cost up to €150,000.”

A similar dispute is underway in New York City, where the local administration wants to cap the number of licenses issued to ride-hailing platforms’ drivers, and establish a minimum wage for them. Uber and Lyft tried to get Mayor Bill de Blasio’s administration to drop the proposal in exchange for the establishment of a $100 million “hardship fund” for traditional cab drivers, but got rebuffed Wednesday.

It seems clear that a more harmonious future, with both ride-hailing and traditional cab drivers in it, involves fairer rules for both sides. Notably, the Spanish government’s Wednesday announcement also proposed a new working group to “share good practices and successful experiences in the search for orderly coexistence of both forms of mobility,” and to figure out how to make taxis more competitive.

But getting there won’t be easy. Taxi drivers’ expensive licenses are also their retirement funds, so a solution that appeals to them would have to involve either maintenance of their value, or some kind of compensation. Meanwhile, a lot of VTC licenses have already been issued, so limiting them now could be a messy affair. According to Reuters, there are already 9,000 VTC permits in Spain, versus 70,000 for taxis, so achieving a 30:1 ratio will involve a lot of layoffs.

Ian Mount and Alice Tozer contributed to this report.