China’s food delivery industry is witnessing a shift as major platforms compete to offer improved benefits for their workers. With mounting pressure from the government and increased public scrutiny, industry leaders Meituan and Alibaba-owned Ele-me have announced expansions in social security coverage for full-time delivery personnel.
Rising Competition to Improve Worker Welfare
The move follows an announcement by e-commerce giant JD.com, which recently entered the food delivery sector. JD.com has pledged to provide comprehensive social security packages, including housing fund contributions and insurance for work-related injuries, medical expenses, unemployment, maternity, and pensions.
This trend aligns with the broader push from Chinese leadership to enhance labor protections. In a recent meeting with top business executives, President Xi Jinping emphasized the need for private sector firms to “cultivate a deep sense of national responsibility,” signaling an expectation that companies contribute to broader social stability.
The Gig Economy’s Growing Role
China’s gig economy currently employs an estimated 82 million people, with more than 10 million working as food delivery drivers. The sector expanded significantly during the COVID-19 lockdowns, offering employment opportunities as traditional industries struggled. However, concerns about job security, low wages, and challenging working conditions have persisted.
“The government has an urgent desire to improve the working conditions of riders, especially under the current common prosperity agenda,” said Hui Huang, a sociologist at Shanghai Jiao Tong University who conducted field research by working as a delivery driver for both Meituan and Ele.me.
Concerns Over Implementation and Competition
Despite the promising announcements, analysts remain skeptical about the actual impact of these initiatives. Companies have not provided clear details on eligibility, worker contributions, and mechanisms to ensure compliance, particularly since many delivery drivers are employed through third-party subcontractors.
“The devil is in the details,” said Jenny Chan, an associate professor at Hong Kong Polytechnic University. “Platforms should clarify how many workers qualify for these benefits and whether drivers will have to contribute themselves.”
The competitive nature of the industry is also a driving factor behind these changes. With JD.com entering the market and offering better conditions, Meituan and Ele.me may feel compelled to follow suit to retain their workforce. “It would be great if JD.com is genuinely setting a new standard for the industry. There might be a huge rippling effect,” added Chan.
Economic Impact and Future Prospects
The financial performance of the major platforms highlights their capacity to support worker benefits. Meituan reported a profit of over 29 billion yuan ($6.4 billion) in the first nine months of last year, with revenues reaching approximately 249 billion yuan. In contrast, Alibaba’s local services division, including Ele.me, posted a loss of $176.8 million for the six months ending September 2023, though revenues stood at $4.8 billion.
Despite profitability in some areas, the industry has faced criticism for harsh working conditions. Regulators have introduced measures to limit algorithmic penalties on drivers and have encouraged the formation of unions to safeguard worker rights.
Drivers’ Perspectives on the Changes
Many delivery drivers remain uncertain about the impact of these policies on their daily lives. Lei, a 20-something Meituan rider in Guangzhou, noted that while the number of delivery workers has surged over the past four years, per-delivery earnings have declined.
“There are too many riders now… it’s very competitive,” he said. On a good day, he earns up to 300 yuan ($42) working ten-hour shifts. However, a recent policy limiting working hours has affected his earnings. “You have to work every day. The more you deliver, the more you earn,” he added.
Regulatory Shifts and Long-Term Prospects
Industry experts argue that structural changes are necessary to ensure long-term worker protection. “China is transitioning from a labor-intensive economy to a technology-based one,” said Huang. “Labor conditions can only improve gradually through systematic reforms.”
JD.com, which operates an extensive parcel delivery network, has confirmed that its new social security plan will be rolled out gradually from March. Meituan has stated that its system will cover full-time and stable part-time workers starting in the second quarter of this year. Ele.me has launched pilot programs in select cities but has not specified a timeline for wider implementation.
While these developments mark a positive step, significant challenges remain. The effectiveness of these benefits will depend on clear policies, enforcement mechanisms, and a commitment from platforms to genuinely prioritize worker welfare. As competition intensifies, the hope is that these changes will set a new benchmark for labor rights in China’s rapidly evolving gig economy.
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