Sharing economy prompts industrial worker shortfall

  • Smebiz
  • Monday, 06 May 2019

No longer attractive: Traditional factory jobs losing their appeal as workers find it to be stressful and repetitive. — AFP

MORE workers are seeking flexible employment by registering with online apps such as food delivery titans Eleme and Meituan, or Didi, the taxi-hailing platform, rather than sticking with jobs in factories.

In addition to greater flexibility, they are hoping to earn more money.

The number of people opting to join this new online labour force hit more than 7 million in 2017, a rise of 1.3 million from the previous year, and is projected to top 100 million next year, according to the State Information Center at the National Development and Reform Commission.

However, the transformation of employment patterns into a web-based job market poses challenges to the development of traditional industries as a result of an “employee drain”.

According to a Meituan Dianping report, an on-demand service platform headquartered in Beijing, 31% of its delivery personnel used to work in factories, but they either quit their jobs because of low salaries and rigid work schedules, or were made redundant as a result of production cuts to reduce excess capacity.

A food deliveryman surnamed Zhang has been registered with Meituan in Beijing since July 2016.

He said his previous job at a shoe factory in Shenyang, Liaoning province, brought an unstable income, which often resulted in financial pressures.

“The salary depended on the factory’s order book. I could earn as much as 10,000 yuan (RM6,143) a month in the two peak seasons – March to April and August to September – but I didn’t get paid when the factory had no orders,” he said.

“For me, being a deliveryman is much better, as I can earn more if I work more, which is fairer. Also, the job is much more fun as I meet different people on different days, rather than sewing shoes day after day, seemingly endlessly.”

Employee drain

According to the State Information Center, the sharing economy will see an annual increase of 40% in the next few years, and will account for 10% of national GDP next year and 20% in 2025.

That will see the sharing economy become a major magnet for job seekers in the future, the centre said.

For example, the food delivery market has expanded rapidly in the past four years. According to a report by Alibaba-owned Eleme, more than 3 million delivery personnel have registered with it. Meanwhile, the number of delivery staff members at Meituan has soared from 15,000 in 2015 to 2.7 million last year.

Flexible employment: More people are turning to the sharing economy for better income and flexibility. — AFP
Flexible employment: More people are turning to the sharing economy for better income and flexibility. — AFP

However, the rise in the number of people working in the sharing economy has resulted in an employee shortfall in the manufacturing sector.

IMedia Research, an industry analyst in Guangzhou, Guangdong province, said that by last year, the number of delivery personnel in Dongguan city had risen to 31 times the level in 2013, while 800-plus manufacturers in the city registered 100,000 job vacancies after Spring Festival.

According to the Dongguan Human Resources and Social Security Bureau, the employee shortfall already existed in some sectors that require both unskilled and skilled workers, but was particularly apparent among skilled workers as a result of long working hours and poor wages.

The bureau said the rate at which workers returned to the city’s factories after Spring Festival was 98.54%, but only because companies and factories unveiled policies to lure workers back, such as raising wages and reimbursing their travelling expenses.

Salaries for skilled workers rose by 8% to 4,613 yuan a month following the holiday, according to the bureau.

Zou Feng, general manager at Pingtop Metal Product Co in Dongguan, said the worker shortfall has eased this year for a number of reasons.

“Some factories closed down, freeing up certain labourers, while some workers returned to Dongguan because the salaries offered in their new hometowns failed to live up to their expectations,” he said.


Gan Mantang, a professor at the School of Humanities and Social Sciences at Fuzhou University in Fujian province, said workers are moving to the service sector because of the imbalance between long working hours and low salaries, along with the rigid, tiring work schedules in factories.

“Recently, the so-called 996 work schedule (advocated by Alibaba’s Jack Ma) has sparked widespread outrage online, as it requires employees to work from 9am to 9pm six days a week,” he said.

“However, labour exploitation is worse in some private manufacturing workshops or factories, where people work from 8am to 10pm, with just two or four days off per month.”

He noted that in addition to the longer working hours, the repetitive nature of factory work is another trigger for resignations.

Zhao Li, a 31-year-old deliveryman for Eleme, said he was exhausted by his previous job, where his work revolved around checking machines that bottled water before it was shipped to a warehouse in Changshu, Jiangsu province.

“The whole process of bottled water production is done automatically by machines. All you have to do is to stand there and check whether the machine is working correctly,” he said. “It was boring because your working partner was a cold-blooded machine.”

About two years ago, Zhao quit his job and became a deliveryman in Beijing: “Actually, I don’t just want the money, because my previous job allowed me to have a good life. But I needed to change my working environment to something fun and flexible.”

Wen Xiaoyi, a professor with the China University of Labor Relations in Beijing, said online platforms have more money to lure workers away from traditional sectors because their labour costs are much lower as a result of elementary employment contracts and a lack of injury insurance.

“Maybe a deliveryman can earn a much higher salary than the average factory worker, but that deliveryman doesn’t even have insurance to ensure he will be covered in the event of an accident,” he said, adding that the employee drain may cause big problems in the future.

“Usually, factories have two choices when they fail to attract workers. One is capital flight, which means the factory in China will be shuttered and opened again in a different labour-abundant country in South-East Asia, while the other choice is to upgrade its manufacturing equipment from manually operated machines to automated ones,” he said.

“The latter course is worse, because machines will replace workers, which means lower-skilled workers who chose to resign from factories may never gain employment in a factory again.”

Future developments

Wen said the regulations that focus on protecting the rights of workers registered with online platforms, such as food delivery personnel and Didi drivers, should be clarified to ensure that the employees are paid decent wages and have access to benefits.

He added that employers should be encouraged to produce more highly skilled workers and raise their salaries accordingly.

In a positive move, the government is endeavouring to raise the social and financial status of workers, and early last year, the State Council, China’s Cabinet, released a guideline focused on improving the treatment of skilled workers.

Speaking at a news conference in February, Zhang Guang, deputy director of the general office of the All-China Federation of Trade Unions, said advances such as information technology and artificial intelligence are changing traditional notions of employment and posing new challenges for the government to protect workers’ rights.

“Flexible employment blurs labour relations between companies and workers, meaning traditional labour-related regulations are no longer applicable,” he said. “We are stepping up to make more suggestions to legislators to clarify labour relations and introduce new labour standards against the backdrop of the sharing economy.”

He said the federation is also making efforts to provide cover for workers such as food delivery personnel and truck drivers to help protect their employment rights.

Government at all levels is also taking measures to produce skilled, new-generation workers and help to ease the employee drain.

For example, the Dongguan bureau of human resources and social security has said higher-quality employment that emphasises improving workers’ performances and skills is urgently needed to stabilise the employment market.

According to the bureau, the city will be built into a “skilled talent pool”, with skilled employees accounting for 22% of total worker numbers by next year to provide strong support for manufacturing development. — China Daily/ANN

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