Delivery service Deliveroo ROO.L has put on hold plans to cut pay and extend working hours for its drivers in the United Arab Emirates after a rare strike over the weekend.
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The Amazon-backed AMZN.O company said in an e-mail to restaurants, seen by Reuters, that it had paused proposed changes in its rider pay structure and that it would engage with its riders over the weeks and months head.
A day earlier, Deliveroo told restaurants that "riders are striking and refusing to attend their shift or deliver orders" and that it would "protect Deliveroo rider earnings to remain the most competitive in the market".
Human rights groups have criticised the UAE and other Gulf states for their treatment of low-paid migrant workers who make up a large part of the workforce. Migrant drivers comprise Deliveroo's workforce.
A Deliveroo spokesperson confirmed that the company was halting all changes and that it would work with delivery riders to ensure a structure that would work for everyone.
"Our initial intention with the announcement was to propose a more well-rounded structure for rider earnings in addition to other incentives," the Deliveroo spokesperson said without providing details.
"It is clear that some of our original intentions have not been clear and we are listening to riders."
Social media posts on Sunday showed large groups of delivery drivers in teal-coloured Deliveroo uniforms striking in Dubai.
Two Deliveroo riders separately told Reuters the company had sought to cut earnings by about 15% to 8.75 dirhams ($2.38) per delivery and extend shifts by three hours to 12.
Both riders, who said they were employed via agencies, said they had to pay for fuel, housing and employment visas out of their own wages.
It is illegal in the UAE for an employee to pay visa costs.
One rider, a Pakistani, said he worked nine hours a day, seven days a week to earn a monthly take-home salary of 390 dirhams ($106).
The driver said while the pay cut had been scrapped, his current roster continued to show 12-hour daily shifts.
A second Deliveroo representative later said shifts would not be changed and that agencies who employ the riders were obliged to cover visa costs.
The representative added that action would be taken against any agency in breach of contractual obligations but did not provide specifics.
Authorities in the UAE, where independent trade unions and labour strikes are banned, did not respond to requests for comment.
Human rights group Equidem in a statement urged Deliveroo to pay workers a living wage and called on UAE authorities to permit trade unions and not punish workers who go on strike.
In response to the Deliveroo strike, some users on social media called for a boycott of the company while others encouraged people to tip delivery workers. Deliveroo competes in the UAE against Uber-owned UBER.N Careem, among other services.
Delivery Hero Shares Sink As Investors Cash In On Strong Sales
In other food delivery company news, the above news follows news that Delivery Hero's DHER.DE shares slumped on Thursday 28 April as investors appeared to cash in on strong first-quarter results from the German online takeaway food company, whose business thrived during the coronavirus pandemic.
"I don't have an explanation for the share move," Delivery Hero chief executive Niklas Oestberg told Reuters after the company published its results, adding: "We are very satisfied with the quarter, but markets are currently very volatile."
Shares in Delivery Hero stock were down 10% at 1215 GMT on Thursday 28 April, among the worst performers in the German blue-chip index .GDAXI, after rising 8% when they opened.
Several traders pointed to stock volatility and profit taking as possible causes for the swing.
The company said its first-quarter sales had jumped 52% and confirmed that it was on track for a positive adjusted core profit in its food delivery business as early as this year.
Food delivery and other companies which did well during the pandemic have seen their stocks gains erased since COVID-19-related restrictions started to ease as investors fear a slowdown in growth and higher costs from soaring prices.
Oestberg said that he did not expect rising inflation to have an impact on Berlin-based Delivery Hero in terms of demand.
It said that it was on a "clear path" towards break-even for the full group in 2023 and would now focus on order volume and operational efficiency to improve its gross profit margin.
It also confirmed its earlier forecast of adjusted core earnings of up to €100 million in the fourth quarter of 2022 for its food delivery business, including the Spanish start-up Glovo.
Oestberg dismissed any interest in buying Grubhub, the US arm of Amsterdam-listed peer Just Eat Takeaway.com TKWY.AS, which last week said it was weighing a sale, less than a year after buying Grubhub for $7.3 billion.
"We are just watching from the sidelines," Oestberg said.
Delivery Hero's Food Delivery Business On Track To Break-Even In 2022
All of the above news followed news that German online takeaway food company Delivery Hero DHER.DE said on Thursday 28 April that it was on track to generate a positive adjusted core profit for its food delivery business as early as this year after a spike in its first-quarter sales.
The Berlin-based group's revenues grew 52% year-on-year to €2.1 billion in the first three months of 2022.
Delivery Hero said it was on a "clear path" towards a break-even for the full group in 2023.
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