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Gig economy gets a boost in China but experts question whether it can be a sustainable fix for unemployment

Written by South China Morning Post Published on   5 mins read

Flexible work opportunities in China are booming, particularly at logistics companies where delivery staff and drivers are in hot demand.

The year 2020 will go down in history as one of the most disruptive in the modern era—with people’s every day working lives changed forever by the impact of COVID-19. China, the world’s most populous nation, has been no exception with Wuhan at the center of the initial coronavirus outbreak.

In previous years, Ma Haiyan’s parents would have left home in Sichuan province after the Lantern Festival, which marks the end of the celebration of the Lunar New Year, to go back to work in Shanxi province. But this year was different.

Income uncertainty cast a shadow over Ma’s family in 2020—a problem faced by many of China’s 290 million migrant workers as China’s economy struggled under the impact of COVID-19. Instead, the 25-year-old university student decided to open her own courier station in March, amid booming demand in the logistics industry for extra help as millions more people shop online amid coronavirus lockdowns.

Even her parents stayed at home to help operate the logistics services station, earning commission via sending and storing parcels for collection by customers in the local community.

“My parents now earn pretty much what they could make when working [in other cities],” Ma said. “Our family is finally together. I’m no longer a left-behind child and my grandparents will not be left behind either.”

Apart from the devastating loss of life as a result of the pandemic, nationwide lockdowns and other strict measures to contain the spread of the virus saw the country’s gross domestic product (GDP) growth slide a historical 6.8% in the first quarter before bouncing back to 3.2% growth in the second quarter.

The pandemic has impacted everything from service-driven industries, such as hotels and restaurants to manufacturing sectors, such as motor vehicles and textiles, leading to hiring freezes and job cuts. About 80 million service sector employees and 20 million manufacturing jobs have been affected by the outbreak, according to a Renmin University report published at the end of June.

The fate of the gig workers

China’s recent experience contrasts with the impact elsewhere though. Globally, almost 70% of gig workers said they now have no income due to the pandemic because of a fall in demand and safety concerns, according to a report by the World Economic Forum, which cited a survey conducted by AppJobs—an online platform to compare app-based jobs around the world.

However, unlike western economies where the so-called gig economy has been hit by lay-offs and loss of temporary contracts, flexible work opportunities in China—particularly at logistics companies where delivery staff and drivers are in hot demand—are turning into a godsend for many who have lost traditional steady work.

“A surge in the unemployment rate is one of the main reasons why we’ve seen an increase in flexible employment. Migrant workers who lost their jobs in the pandemic have to find new jobs and maybe have no better choices,” said Dan Wang, a China analyst at the Economist Intelligence Unit (EIU). “At the same time, employers also need to lower their cost when hiring new workers because they are under economic pressure as well. So hiring a temporary worker has become the top choice.”

Unemployment jumped

The move towards temporary work has also been backed by Beijing. China’s unemployment rate jumped to 6.2% in January and February, from 5.3 per cent a year earlier—leading the government to take the flexible employment model more seriously.

Late last month, Chinese vice-premier Hu Chunhua called on local governments and enterprises to create a favorable environment for flexible employment, aimed at helping rural and urban low-income groups, according to a report by the state-run Xinhua News Agency.

The government has also implemented other support measures, including the distribution of digital shopping coupons to stimulate domestic consumption, the launch of nationwide online recruitment projects, and support for street stalls and small businesses, which Premier Li Keqiang described as an important source of jobs and the “fire” of China’s economy.

Around 7,000 families like Ma’s opened community courier stations in March under Cainiao, the logistics arm of Chinese e-commerce giant Alibaba Group Holding, which owns the South China Morning Post.

Where jobs have been created

Cainiao said in May it had tens of thousands of courier stations and had created nearly 100,000 jobs this year with many teachers, university students and programmers gaining extra income by working for the company.

Meanwhile, JD logistics, the logistics arm of the country’s second-largest e-commerce platform, offered 20,000 front-line positions during the pandemic to help small and medium enterprises who may have had to furlough staff. The company has also offered short term contract positions, for warehouse workers, pickers, couriers and drivers. Similar moves have been made by on-demand service platforms such as Meituan Dianping and Ele.me.

Since the pandemic, several hundred thousand people have registered to be couriers on Ele.me. Many of them have a second job, with a company survey of 93,000 couriers showing that 26% were micro and small business owners and 21% were technicians.

About 1.4 million new couriers joined Meituan in the first half of this year. Based on a survey of more than 10,000 couriers, about 30% of them lost their previous jobs because of the pandemic.

Meituan launched an initiative last Friday offering 500,000 flexible employment positions, including food delivery riders and operations and maintenance staff for rental bikes, one day before it announced that the company’s daily food delivery orders had surpassed 40 million in a day.

During the pandemic, ride-hailing giant Didi Chuxing also tested delivery services and on-demand logistics services to deliver groceries and parcels in China, which gave drivers additional income.

Read this: Here’s what to expect from Chinese tech firms in Q2 as economic recovery continues

To be sure though, the flexible employment model can also mean unstable income. And whether the demand for these temporary positions will last and stay strong as the country gradually recovers from the pandemic is also open to debate.

For 38-year-old Wang Wenchen, a flexible job as a Didi driver did not turn out as planned.

Wang, a truck driver living in the northern Chinese city of Harbin, moved to Beijing in March amid a need to supplement his income. He took a job as a temporary Didi driver but found that he could still barely cover the cost of living despite working 18 hours a day.

“I thought there was money to be made as a Didi driver in Beijing but I found that it was impossible to save anything unless I handled more than 30 orders a day,” Wang said. “I may quit the idea after the contract finishes next month.”

The EIU’s Wang also sounded a cautious note.

“[Gig working] is just a temporary arrangement, it cannot solve the problem,” Wang said. “For employees, they have no right to bargain for a better package, and for companies, to hire a temporary worker without proper training is not the best option [in the long run].”

This article was originally published in the South China Morning Post.


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