Around the world, platform workers have been organising, and a key goal is to demand state regulation of the platform economy. China makes an interesting case study in that the government is not afraid to regulate its major tech companies and rein them in where it deems necessary. China’s tech giants are massive and powerful, but they are still at the behest of the party-state, unlike in other regions where the state may be hesitant or lacks wherewithal to adopt meaningful regulations in this sector.
Companies operating in China have little choice but to comply with regulations on domestic storage of user data and carrying out in-house censorship directives, and even to refrain from IPOs in certain situations. Such types of market control have pushed foreign tech competitors out of China’s large market, from Google and Amazon to Uber and Airbnb, allowing domestic companies to compete for greater market share, creating monopolistic conditions within each subsector.
Another factor in China is that there is a sole official trade union federation, the All-China Federation of Trade Unions (ACFTU). The ACFTU has promised to step up and focus its attention on gig workers, and it has a huge amount of public resources at its disposal in an environment where independent organising is unlawful.
To what extent, then, do state regulations on China’s tech companies give hope for a fairer deal for China’s gig economy workers? And what can we expect from the actions of the ACFTU? In this article, we evaluate the effectiveness of a set of 2021 administrative regulations that govern China’s platform economy and the role of the ACFTU in improving the working conditions for China’s food delivery drivers.
China’s Platform Economy and its Tech Giants
China’s platform economy is the largest in the world, with gig workers accounting for up to 10 per cent of China’s working population. This is a result of a consumers’ direct leap to mobile internet technology in the late 2000s and heavy initial investment into China’s domestic tech companies in the early 2010s. The decline of China’s manufacturing sector in the late 2010s and the onset of the global pandemic both led to a recent rush of workers into the gig economy.
China’s tech companies, such as JD, Alibaba, Tencent, Bytedance, Meituan, Suning and Baidu, may not be household names outside of China, but they are some of the largest in the world in terms of annual revenue. Their performance domestically differs from other sectors of the economy. Global manufacturers have supply chains in China and sell their products to the domestic market; iPhones and Tesla cars are popular among consumers in China, for example. But the platform economy and its burgeoning services sector is almost entirely dominated by domestic companies, and foreign companies cannot or choose not to compete.
In the food delivery industry, Meituan and Ele.me are the two main competitors. In terms of scale, China Labour Bulletin (CLB) estimates a total of 2.14 million active riders in the two companies’ systems. Of course, the number of reported registered workers far exceeds the number of workers actively taking orders in any given period. For example, seven million riders were estimated to be registered in the food delivery industry in 2019. But we also see a trend since then that more workers are relying on the platform as their primary means of livelihood.
Rise of the Algorithms and Labour Challenges for China’s Food Delivery Riders
As in other parts of the world, these tech companies have created entirely new sectors and types of work, from ride hailing drivers, package couriers, and even live-streamers and models in the e-commerce industry. The platform economy model actually has very thin profit margins, and a lot of capital is reinvested to keep up with the competition between companies during expansion. As a result, companies have held off high labour costs by treating workers as independent contractors. The platform workers, as a result, suffer from a lack of labour protections and deteriorating working conditions, while the platform’s algorithm becomes more sophisticated in controlling their labour.
In July 2021, about a dozen national ministries and commissions jointly released a set of Guiding Opinions to regulate how companies treat their platform workers. These high-level regulations signify that the administrative state has agreed on comprehensively changing how gig economy workers are treated by corporations and the legal system alike. Over one year on, we analyse how these regulations apply to food delivery riders in China and assess what challenges they still face.
Food delivery riders make for an interesting comparative case study, as these workers are highly visible in society, and the industry model is fairly similar across geographies. In China’s food delivery sector, drivers have been raising their voices over the past several years about continual pay decreases, wage arrears and problems resulting from lack of management supervision, including a harsh penalty system and mileage calculation method that discounts actual distance travelled.
CLB’s Strike Map first logged cases of food delivery riders taking collective action in 2016, and in 2018 recorded the highest number ever, with 57 collective actions that year. The pandemic and deteriorating economic conditions led to a drop in collective actions, with only a few cases recorded in the past three years. This drop in cases, however, does not mean that the regulations have been effective or that conditions have improved for food delivery workers. Rather, workers are facing more desperate conditions than ever, and cases of individual workers inflicting self-harm as an unfortunate means of protest are rising. Each of the various issues food delivery workers face warrant further official intervention.
Workers’ Labour Relationships are Fragmented Among Corporate Entities
In 2021, a delivery rider in Beijing surnamed Shao found that he was engaged with five different entities when he pursued a workplace injury compensation claim. He wore the Meituan uniform and delivered for the platform company, but it was another company – a local delivery hub – that gave him his work orders, another company that paid his insurance, another his wages and another his taxes. After his injury in a traffic accident, Shao sought compensation. Over the course of two years and five separate judicial proceedings in two cities, no employment relationship was found with Meituan, the local delivery hub, or the other corporations.
This example is not out of the ordinary and shows how the legal status of gig workers has been further muddled by complex corporate structures and relationships. The 2021 Guiding Opinions specify that platform companies should have formal labour contracts with platform workers, but only when the labour relations “fall under the mandated circumstances,” which are not clearly defined and seem to categorically exclude the circumstances of most gig workers. For those that “do not completely fall into the circumstances”, companies only have to provide a written agreement to workers. Judging from the language of this clause in the Guiding Opinions, we can see that the state has no intention to directly challenge the employment status of gig workers.
In China, food delivery workers are either considered self-employed by labour outsourcing companies, or are subcontracted by different layers of corporate entities. This is the result of a process that has over time divided up the legal relationship and employer responsibilities in an intentional shift to avoid liability. Under the Guiding Opinions, this status quo will not be changed: workers register directly through the Meituan or Ele.me app to make deliveries, and with one stroke of agreeing to the terms and conditions, they “fall outside the circumstances”.
For workers managed through local substations and contractors, the Guiding Opinions state that they have to be hired by legal labour dispatch agencies, while the main company has to supervise the workers’ management. This provision, however, will not have the desired effect, since the layers of labour subcontracting have become so difficult to supervise, as the case of worker Shao shows. For any real change, the government would need to ban certain kinds of labour subcontracting altogether, which it has done before. In 2014, regulations limited the use of labour dispatch to no more than 10 per cent of a company’s workforce, only leading to the current fragmented relationships we see today.
The Boss is an Inflexible Algorithm that does not Understand Real-world Conditions
Gig workers everywhere are facing harsh, gruelling and unsafe working conditions as a result of inhumane algorithms extracting as much labour as possible for the benefit of the platforms. Algorithms do not readily take into consideration workers’ health and safety, for example. The apps dictate which delivery route riders should take, often ignoring basic traffic regulations and discounting physical impossibilities of certain paths. This not only affects workers’ pay and could lead to fines for late orders, but it also risks their lives.
A food delivery worker surnamed Han died from overwork and exhaustion in December 2020. Ele.me denied any employment relationship and initially offered Han’s family only 2,000 yuan (US $287) as a gesture, but public backlash led to the company paying the standard compensation amount for formal employees, which is 600,000 yuan (US $86,000). This case illustrates, among other major problems in the industry, how the algorithms overwork food delivery riders and lead to deadly consequences.
In China, the Guiding Opinions zeroed in on the subject of algorithmic control. Companies were mandated to revise their rules related to pricing, commissions, working time and penalty systems, all of which are largely dictated by the algorithms. The Guiding Opinions also state that the performance evaluation methods should not threaten workers’ safety.
Meituan and Ele.me both responded to the Guiding Opinions with changes to their labour practices. Meituan now allows riders more control over how they take orders and recalculates delivery time in the case of abnormal conditions, including restaurants that are slow to provide the meals, poor traffic conditions and other accidents. Ele.me also upgraded its rider safeguarding system to allow for more flexible delivery times, such as for inclement weather, congested traffic and customer-side issues.
These changes are a positive result for China’s food delivery riders, but the platforms only revised their rules related to atypical conditions. The problem is that delivery times for normal conditions have been reducing since 2016, when more resources were allocated to upgrade the algorithms. Rather than benefiting workers by saving them time and increasing their pay, these formulas have benefited the corporations who demand that food delivery riders work harder, work longer hours, and make less per order than ever before.
The flexibility introduced into the system will not apply to the average order, so the Guiding Opinions do not get at root causes of rider dissatisfaction and rights abuses. In other words, if the Guiding Opinions had been passed earlier, they still may not have been able to save Han’s life.
Top-down Versus Bottom-up Methods of Change for Workers in China
In China, there is only one official trade union, the ACFTU. The ACFTU has repeatedly been urged to reform – including by President Xi Jinping himself – to become less bureaucratic and represent workers’ true interests. However, the ACFTU tends to issue political documents and show bizarre displays of loyalty to state and party political campaigns rather than do any real grassroots work to benefit China’s labour force. Workers are often unaware of the existence of the official trade union or are deeply sceptical of interactions with it.
Independent labour organising is unlawful and is often criminalised. The recent case of food delivery rider Chen Guojiang, known popularly as Mengzhu, is one example of the risks of independent worker organising. Chen began organising food delivery workers in Beijing through online chat groups. Workers discussed common labour challenges and staged small-scale actions to push back against Meituan and Ele.me trampling on their rights one algorithm at a time. In February 2021, Chen was arrested for “picking quarrels and provoking trouble”, a charge that is politically motivated. He was detained for a prolonged period of time but was later released and has since remained low-profile.
Instead of seeking union representation, workers with ad hoc labour disputes increasingly resort to discrete and small-scale actions to get the attention of local government officials, the media and other actors to help pressure a favourable result at the workplace level. For example, workers are posting into the social media ether about their unpaid wages, workplace injuries and other problems, but labour rights outcomes in these scenarios are often unclear. Navigating the legal system through labour dispute arbitration and subsequent civil lawsuits is time consuming and can cost more than workers can afford, and even favourable judicial outcomes go unenforced.
Despite these difficult domestic conditions, the voices and experiences of China’s workers are being recognised at the highest levels. The 2021 Guiding Opinions are one example of this recognition. In addition, at China’s annual legislative meetings in March 2022, government officials and ACFTU representatives raised a host of meaningful policy suggestions that show that the scope of challenges facing platform workers are recognised as hindering China’s overall policy and development goals.
The ACFTU itself has vowed to better represent platform workers, instituting a drive to recruit more workers from what it calls “eight major groups,” which includes some categories of platform workers and food delivery riders specifically. Some goals of this long-term campaign are to form new unions for sectoral workers and even to hold bargaining sessions with companies.
The ACFTU has indeed increased the number of food delivery unions and signed some collective contracts in a few localities, but a closer look reveals that the unions still lack substance and are not responsive to workers’ true demands. Through talking with union officials in the course of our work, we have found that the local delivery unions established recently were chaired by company management, and collective agreements were mere gestures and had no input from rank-and-file workers
Along these same lines, the ACFTU has recently boasted that all of China’s major tech companies now have enterprise unions affiliated with the ACFTU and that almost seven million platform workers are members. Again, this is a step in the right direction, but so long as the enterprise unions lack democratic processes for worker participation, they will still be at the behest of management or, as in the case of the ACFTU itself, party and state goals rather than worker interests.
State Regulation and Unionisation is a Huge Step Forward but Will Never be the Only Answer
Despite top-down regulations and a focus from the official trade union on platform workers, implementation and meaningful change for workers on the ground is elusive. The reality is that in the labour arena, there is not only the space for all actors to perform their roles in concert, but also it is mutually beneficial for them to do so. State regulation must be designed to address the actual needs of workers, the union has a role in ensuring proper enforcement at the workplace level, and workers should not be afraid to seek such representation and to assert their legal rights. In China, what this looks like is for the ACFTU to perform its mandate, and when it begins to do so, workers may be less reluctant to seek out the union and demand that it represents them. The momentum of top-down directives could in this way be more effectively leveraged into bottom-up change.
In CLB’s repeated phone calls with trade union officials, the ACFTU has begun to take more initiative. Yet this is usually limited to legal assistance, and the union does not help workers before legal violations occur or follow up on legal cases after they have been passed off to lawyers. At the ACFTU, worker assistance, labour organising and negotiating are separated, and any negotiations only call for minimum labour protections to be enforced, rather than pushing the line on better conditions. However, with clear regulations in place and a mandate for reform, the ACFTU is now in a position to show that it can be truly representative, and the result will spell the union’s legitimacy for the future.
For workers elsewhere seeking state legislation to protect their interests, it is important to see that even strong state regulation is not a panacea for workers’ core grievances, and it will take joint efforts from various segments of society to effect meaningful change. In addition, the labour struggle is an ongoing process in which stakeholders must continuously adapt to changing needs and circumstances. Regulation is one step, implementation and enforcement another, and worker organising must always be ongoing. Globally, this process can be strengthened by understanding the commonalities that platform workers face, building off other worker movements and rising together with one voice to demand dignity and respect from society.