China's grassroots labor market (Part I): turbulent destiny of gig workers in platform economy

The road ahead: challenges and prospects for basic workers in the transformative platform economy

2021: if worse comes to worst, quit and become a DiDi driver!

2023: DiDi not hiring anymore! What now?

China's employment landscape has undergone a profound transformation, driven by the rise of the platform economy. The working-age population in China stands at 876 million in 2022, with 84 million (10% of the total) individuals engaged in new forms of employment, which includes truck drivers, ride-hailing drivers, delivery couriers, and food delivery riders (People's Daily).

The emergence of these new employment opportunities can be attributed to the growth of the tertiary industry, which experienced a surge in 2013. This shift coincided with the rapid expansion of internet usage, with the percentage of Chinese internet users in the population skyrocketing from 46% in 2013 to 70% in 2020.

Pivotal moments in the digital economy further fueled this transformation. In 2013, DiDi's introduction of private car operations and generous subsidies attracted a wave of full-time ride-hailing drivers. Meituan's groundbreaking foray into takeaway services revolutionized the food delivery landscape. Simultaneously, the flourishing e-commerce industry propelled the courier sector to unprecedented heights, experiencing a staggering 61.6% year-on-year growth.

However, the once-promising narrative has taken a turn since 2020. Giants of the platform economy now face mounting growth pressures, resulting in redundancies and a significant wave of job losses. This shift marks a new chapter in the dynamic and ever-evolving story of China's platform economy.

This article examines China's grassroots labor market, with a particular focus on the platform economy, providing insights into the complex dynamics behind the unemployment rate and potential opportunities that lie ahead.

Where paths diverge: exploring job demand in the platform economy

The digital landscape has unleashed a tapestry of employment opportunities, each thread intricately woven with the growth of major internet platforms. While the realms of live streaming, short video, and food delivery exude resilience, couriers and ride-hailing drivers face a challenging decline in job prospects. The dynamic nature of these new forms of employment reveals a fascinating tapestry of opportunity and transformation in the digital realm.

Disclaimer: We collected employment data from major comprehensive online recruitment platforms in China. As we haven’t covered the recruitment platforms that specifically target blue-collar workers/gig workers, the conclusions based on our sampling data may have bias.

Ride-hailing drivers: battling deteriorating conditions and high turnover

As of April 30, 2023, China had 309 licensed online ride-hailing platform companies, with 5.4 million ride-hailing driver certificates issued, representing a 49.2% and 112.4% increase respectively compared to October 31, 2022 (Ministry of Transport).

However, on the demand side, the market size experienced a 1.38% decline in 2022, with a 3.32% decrease in the user base, leading to a significant drop in online car-hailing order volume.

Starting from May 16, 2023, Changsha has temporarily suspended new applications for online car-hailing transport permits. Other cities like Dongguan, Sanya, Wenzhou, Jinan, and Suining have also issued warnings about market saturation, highlighting that the average daily order volume per online car-hailing vehicle in those areas is less than 10 orders.

As the market becomes oversaturated, drivers' working conditions are deteriorating.

• Thinner income but heavier workload: Subsidies have shifted from drivers to passengers, and platforms are charging higher commissions. Drivers are pressured to accept low-paying orders that were previously ignored.

According to the survey by Tsinghua University on ride-hailing platforms in China's tier 1 cities in 2021, 78% of ride-hailing drivers in China are full-time, with over 60% aged between 26 and 45 (average age of 41), and 97% are male drivers. To maintain their previous income levels, drivers are working longer hours. 75% of online car-hailing drivers work 7 days a week, with 49% working 8-12 hours per day, and 31% working over 12 hours per day.

• Stricter scrutiny from platforms: Platforms set specific working hour requirements, demanding a minimum of 5.5 hours of passenger time per day or facing fines. The use of in-car recording, originally for safety purposes, has turned into a form of surveillance, a driver complained to me while driving.

• High turnover rate: 33% of drivers have less than 1 year of experience, and 30% have 1-3 years of experience (Tsinghua University). Due to the intense workload and poor income prospects, some new drivers are leaving the industry.

A courier's journey: the rise and fall of E-commerce

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