You are here

Gig economy throws wrench into China labour policy

CHINA-STOCKS-INTERNET-IPO-MEITUAN-140611.jpg
The gig economy is throwing a wrench into China's labour policies. Factory walkouts may be on the decline, but scattered protests involving the likes of food delivery startup Meituan Dianping, ride-hailing giant Didi Chuxing and other app-based employers are rising.

[HONG KONG] The gig economy is throwing a wrench into China's labour policies. Factory walkouts may be on the decline, but scattered protests involving the likes of food delivery startup Meituan Dianping, ride-hailing giant Didi Chuxing and other app-based employers are rising. The shift could force Beijing to choose between two favourite priorities: social stability and tech innovation.

Much like the US$12 trillion economy, its workers and their protests are changing. Strikes and demonstrations in the manufacturing sector accounted for nearly half of the total in 2013, according to analysts at the Hong Kong-based China Labour Bulletin. By last year, that proportion shrank to just over a fifth – in line with unrest in the services sector.

Meanwhile, taxi driver protests declined from 55 per cent of all transport sector unrest in 2013 to less than 40 per cent last year, according to CLB. That's now roughly in line with incidents directed against Didi, Meituan or rivals like Ele.me, which in turn rose from nearly zero five years ago to 38 counts in 2017.

The rise of an Internet-enabled precariat has triggered anger from London to Mumbai. Still, the risks are greater in a country of 1.4 billion people that has privileged stability above all. The central government has improved labour laws in recent years, but it still deals with protests largely by relying on local officials to defuse them. They in turn sometimes cajole factory owners or even buy off striking workers to maintain stability. Fire-fighting works less well, however, when the rallies are against app-makers spread across the country, fuelled on national social media.

sentifi.com

Market voices on:

The danger is that Beijing will reach for its usual toolkit and pressure individual tech companies into band-aid fixes to make immediate problems go away. That certainly misses an opportunity to enhance the social safety net for China's freelance workforce. Worse, though, it adds regulatory risk for fledgling tech companies, stifling future innovation and investment.

For those eyeing blockbuster listings and fundraising, the ultimate choice matters greatly: truck-hailing app Manbang, involved in protests over truck fees earlier this summer, is seeking a financing round to value it at up to US$10 billion, according to The Wall Street Journal. Meituan wants to raise more than US$4 billion in Hong Kong. Too much traditional policy will benefit neither.

CONTEXT NEWS

Chinese truck drivers have launched protests in at least a dozen locations around the country since June 8, demonstrating against low haulage fees and rising fuel costs, according to China Labour Bulletin, a Hong Kong-based organisation that tracks labour action in the mainland.

Drivers blamed declining rates on the dominance of truck hiring firm Manbang, which allows companies to connect directly with truck drivers through an app. The company said in April that 5.2 million of China's seven million freight trucks were members of the Full Truck Alliance Group, its formal name. Manbang was formed in a merger of two logistics platforms, Yunmanman and Huochebang.

REUTERS