Driven to despair by China’s perilous gig economy

A viral video in August from Hangzhou showed a delivery driver kneeling before a security guard after being fined for scaling a fence to save time. The incident ignited protests, exposing embedded exploitation in China’s food delivery industry.

Combined with the release of the Chinese blockbuster movie Upstream highlighting the struggles of gig workers, the incident has intensified public discussion about the plight of 12 million Chinese delivery riders. 

Their challenges expose deeper structural issues in the country’s gig sector, an emblematic feature of the post-pandemic economic malaise.

The transition from labor-intensive manufacturing to a knowledge-based digital economy has challenged China’s reliance on low-cost workers. Covid-19 exacerbated this shift, resulting in mass unemployment. 

As factories closed and jobs disappeared, many individuals, especially young people, struggled to secure suitable employment. Instead, they turned to gig economy platforms like Meituan and Ele.me for survival. 

Delivery drivers

This influx underscores not only economic distress but also the systemic inequalities that leave these workers vulnerable.

A key factor exacerbating the plight of delivery drivers is China’s hukou policy, which enforces a dual urban-rural structure. This system restricts rural migrants from enjoying the same rights as their urban counterparts. 

Many lack access to services such as housing, healthcare, and education. They are forced to rely on gig platforms to make a living, often at the cost of their dignity and well-being.

While the Chinese government has made some efforts to reform protections for these workers, significant changes are needed to uphold their fundamental rights. 

Platform companies use algorithms that prioritize efficiency and profit over worker welfare. They create an environment that leads to high accident and fatality rates due to overwork.

With more individuals entering the field as a result of the pandemic, competition has skyrocketed, pushing down wages and increasing workloads. Many may earn just one yuan or 14 US cents per delivery, an illustration of exploitative conditions.

But this is not merely a result of corporate greed, it is also shaped by the broader socio-economic context in China. 

Platform companies employ predatory algorithms designed to maximize efficiency and minimize costs, responding to consumer expectations for cheap and rapid delivery services. 

Chinese consumers increasingly demand high-quality, low-cost services, which pressures platforms to deliver at the lowest possible fees, creating a race to the bottom. This competition shifts the risks and burdens onto workers.

The gig economy thrives on the premise of flexibility and independence, but many riders face a precarious existence. Often classified as independent contractors, they lack access to benefits, job security, and workplace protections. 

Imposing fines

This informal status leaves riders vulnerable to arbitrary decisions made by platform operators, who can impose penalties for delays or performance issues.

The Chinese government has recently implemented policies aimed at improving conditions for drivers. These measures include imposing fines on platforms for failing to provide adequate working conditions. 

Restricting rigid algorithms and encouraging riders to join unions were other initiatives, as well as establishing ‘resting stations’ in cities like Shanghai along with essential spaces for recovery and socialization.

But these efforts are often piecemeal and cautious. While the government seeks to promote platform growth to create jobs amid rising unemployment, it also aims to protect workers’ rights and prevent exploitation. 

The prevailing sentiment seems to be that providing job opportunities, even in the gig economy, is better than allowing widespread unemployment to take hold.

Rising tension between economic growth and worker protection is emblematic of a larger global trend amid a rapidly evolving labor market. Policymakers must strike a balance that encourages innovation while ensuring workers are treated fairly. 

Immediate action is necessary to protect delivery workers from further exploitation. Platforms must be compelled to raise wages, implement better working conditions, and reform their algorithmic management systems to be more humane.

Addressing this issue requires engaging the public and users of these platforms and raising their awareness of social equity. 

Consumer expectations may evolve to demand higher quality, reliability, and transparency in the gig economy. Such shifts could influence how businesses operate, compelling platforms to adopt more equitable practices.

China must establish a long-term comprehensive social security framework that aligns with the realities of the digital economy and platform labor. This framework should address health insurance, pensions, and paid leave for gig workers.

Individual welfare

It should also create a more equitable labor market with protections for all workers, regardless of employment status.

The road ahead will be challenging, but acknowledging the dignity of gig workers with meaningful reforms can lead to a system that values all contributions. The evolving labor market must prioritize individual welfare over the pursuit of profit. 

The time for action is now, as the voices of delivery workers must be heard and their rights championed. Only through a collective effort from consumers, businesses, and policymakers can a more equitable future in the gig economy be achieved.

Hui Huang is an Assistant Professor in the Department of Public Economics and Social Policy at Shanghai Jiao Tong University. He is also a Research Associate at the School of Social Science and Public Policy at King’s College London. His research focuses on how digital technologies, represented by AI and algorithms, impact employment.

This article is republished from East Asia Forum under a Creative Commons license. Read the original here.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.