The world’s largest labor market has changed. China’s farmers and factory workers are no longer alone: a new “army” of digital platform workers is taking on an increasingly important role. The fates of these precarious workers will determine the future of China’s economy and society.
The world’s most advanced gig economy
Thanks to its early adoption of the “super-apps” that organize everyday life, China has the world’s largest and most developed gig economy. Most are employed as app-based taxi drivers and food delivery workers, but there are dozens more services offered through digital platforms.
The model is rapidly expanding in other Asian countries, with 10 million gig workers in India and 1.2 million in Malaysia.
The “invasion” of the gig economy in factories
The phenomenon is no longer limited to services. In manufacturing, millions of casual workers are called “on demand” to fill positions on production lines.
Most do not require special skills beyond basic knowledge. Surveys estimate that workers already make up a third of China’s industrial workforce – three times the proportion in the United States.
For companies, the advantage is flexibility: they can quickly adjust their workforce to market needs, seasonal peaks or geopolitical turmoil. Technology, which has automated many demanding tasks, has left gaps in simpler jobs, which are now filled by casual workers.
The possibilities and pitfalls
For many, the gig economy is proving lucrative. A 2022 study found that professional delivery workers earned an average of 20% more than migrant workers. Others choose such jobs to escape the monotony of traditional repetitive tasks.
However, precariousness comes at a cost; without a permanent employer, young people lack the education and skills that would secure them prospects.
The lack of stable employment makes it difficult to access social services and benefits, due to the hukou system of residence registration.
This can lead to a lack of urban settlement, delayed marriage and childbearing, exacerbating China’s demographic problem.
Lessons from Asia for the rest of the world
While some challenges are uniquely Chinese, the country’s experience offers useful lessons for everyone. What is happening today in the Asian dragon will soon happen in Western economies.
In many Asian economies, youth are resentful of the lack of good jobs, which is even triggering protests – as in Indonesia, where recent incidents erupted after the death of a gig economy worker.
A key lesson is that industry no longer offers the stability it once did. Automation has reduced or “degraded” many jobs.
Equally important, gig work cannot be abolished in the hope that it will be replaced by permanent jobs. For many, the alternative is unemployment.
The need for a new social contract
The answer is a new approach to the welfare state. China has already regulated app algorithms to be less oppressive and is pushing platforms to provide social security.
India is encouraging gig workers to register to gain access to accident insurance and, in the future, health coverage.
But more ambition is needed: reducing mandatory contributions so that employers do not exclusively prefer flexible working, portability of pensions, better linking of contributions and benefits. Countries at risk of “growing old before they get rich” cannot ignore precarious work. Supporting these millions of people is more critical than ever.
