Mar 10, 2021 08:38 PM

In Depth: ‘Blood and Sweat’ Don’t Pay Off for China’s Army of Delivery Workers

By Yuan Ruiyang, Guan Cong, Qian Tong, Qu Yunxu and Timmy Shen

In January, a food deliveryman for Alibaba-owned takeout dining specialist Ele.me set himself on fire outside a shop in the eastern Chinese city of Taizhou.

People from nearby shops helped extinguish the flames. But the deliveryman, surnamed Liu, who hauled food for Ele.me’s Fengniao service in Jiangsu province, refused to be taken to the hospital until he had discussed the issue of money he was owed for his “blood and sweat.”

As Covid-19 ravaged China and plunged parts of the country into lockdown early last year, delivery workers became essential. Despite their contribution, many still lack the same labor protections as employees in more formal lines of work.

Liu’s ordeal is just one story that has drawn attention to the grueling conditions faced by millions of workers from China’s low-end services sector. He is among the legion of internal migrants who once found jobs in construction and manufacturing, but now toil under difficult conditions delivering food and packages at breakneck speeds. They often work long hours, frequently without overtime pay, and have little recourse when they get into disputes with their employers.

“The labor force now working for the food delivery platforms is the same as that working at Foxconn Technology Co. Ltd. a decade ago,” said a labor industry veteran who asked not to be named, referring to the contract manufacturing giant that assembles devices for Apple Inc. Foxconn factories were the site of a string of workplace suicides early last decade, and in 2010, the company’s President Terry Gou was forced to deny that the firm had asked workers to sign agreements stating they did not intend to commit suicide.

In addition to hiring fixed-term regular employees, today’s internet companies often use third-party labor service platforms to employ a large number of “temporary workers” who work flexible hours. This new “gig economy” uses data and mobile technologies to quickly match labor supply with demand, creating a new segment of the economy that the government views as a jobs creator.

Currently, Meituan and Ele.me, which run the most popular takeout delivery services in China, each have nearly 1 million monthly active delivery workers. Meituan has about 3.99 million registered delivery workers, a number that has grown by more than 2.1 million since the epidemic began in China. Ele.me has 850,000 monthly active delivery workers out of 3 million or so registered. In the third quarter of last year, the gross transaction value of Meituan’s food delivery business increased by 36% year-on-year, and its food delivery business’s operating profit jumped to 768.5 million yuan ($117.9 million) from 330.9 million yuan in same period in 2019, according to its third-quarter results.

“One can make money as long as he works hard” is the mantra of food delivery worker Sun Bao (an assumed name), who works nearly 12 hours a day and can complete up to 52 deliveries a day. Sun said that he has to save at least 7,000 yuan a month or it will be difficult for his wife to raise their twin sons back in their hometown.

Sun doesn’t consider entitlements like health insurance when considering whether to take a job. Meituan, which employs him directly, deducts more than 160 yuan from his salary each month to pay for the “commercial insurance” that is supposed to cover all of its delivery workers for accidents and work-related injuries. For Sun, that’s a big enough expense.

The model of employing temporary workers prevails among internet platforms in the shared economy, which use labor services from the temporary workers’ platform so they don’t have to pay as much in social insurance costs. Although they can work longer and earn more under the “piece rate” model that pays them based on the number of deliveries they make, most don’t receive the standard slate of entitlements such as health insurance and work-related injury insurance that formal employees receive.

“The labor market for flexible employment is dominated by new companies. Because of the low barriers to entry, these companies try to get a competitive edge by making the lowest bid possible to the platforms,” the same labor expert said.

They can do this because they don’t have to pay the costs for worker entitlements like social insurance, the expert said.

Hao Zhengxin, a lawyer who has long provided legal advice for temporary workers, said for the purpose of such entitlements, it is currently difficult to establish a formal labor relationship between part-time delivery workers and the platforms they work for. If a delivery worker is injured on the job, the platform basically takes no responsibility, and for full-time delivery workers, only some end up getting their labor relationships clarified legally in such a way that compels the platforms to take responsibility, he said.

As a practical matter, delivery workers don’t get much benefit from the commercial insurance that they do have. That’s because the coverage is often spotty and making claims is often difficult.

Dong Baohua, a professor at East China Normal University Law School who helped draft China’s Labor Law, said that the law’s biggest flaw is its inability to protect the rights of people who are unable to protect themselves, including temporary workers.

“If a worker gets in an accident, the internet platform won’t usually compensate the worker unless it gets widespread attention online,” Dong said. “This is not a sign of social progress.”

He said that policymakers’ top priority should be to speed up the process for improving labor protections for temporary workers and others in new forms of employment.

Lu Jingbo, director of the River Delta Law Firm in Shanghai, said there needs to be scientific standards established for determining when someone dies from overwork and a union set up for food delivery workers so they can take advantage of collective bargaining.

In the long run, the country should change the law to fundamentally address the issues facing such employees, Lu said.

Contact reporter Timmy Shen (hongmingshen@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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