19 October 2024

Delivery workers are enduring long hours and intense pressure, and now, many are reaching their breaking point.

In one incident, a delivery rider kneels to apologize to a police officer who stopped him for running a red light, before abruptly pushing over his motorbike and sprinting across the road, oblivious to oncoming traffic.

In another case, a group of angry drivers gathered outside an apartment complex, demanding justice for a fellow delivery worker allegedly mistreated by the building’s security guards.

These are just a few examples of the explosive confrontations involving delivery workers that have gone viral on Chinese social media, highlighting the immense strain they’re under.

Once a thriving $200 billion industry—the largest in the world by revenue and order volume—the delivery sector more than doubled during the three years of Covid-19 lockdowns, offering reliable income to many casual workers. But now, with China’s economy struggling due to factors like a prolonged property crisis and weak consumer spending, delivery workers are bearing the brunt of the downturn.

A sluggish economy is leading consumers to order cheaper meals, which reduces workers’ earnings as most rely on commission-based pay. This forces them to work longer hours to maintain their income, according to Chan.

Additionally, the dominance of two major food delivery platforms allows these companies to dictate contractual terms, leaving workers with little leverage to resist worsening work conditions.

Around 12 million drivers power China’s vast food delivery network, which started to take off with the launch of the app Ele.me in 2009, now owned by Alibaba (BABA). These workers played a crucial role during the pandemic, ensuring food delivery while residents were confined to their homes under strict lockdowns. Today, they are an integral part of China’s dining culture.

Delivery workers are a constant presence, navigating busy streets and hidden alleys to deliver meals daily, often braving heavy rain and strong winds.

According to iiMedia Research, the market grew to $214 billion in 2023, 2.3 times the size it was in 2020. By 2030, it’s projected to hit $280 billion. Morningstar reports that China has the world’s largest takeout delivery market.

Despite this growth, workers face immense pressure to meet tight deadlines, leading many to speed or run red lights, creating dangerous conditions for themselves and others on the road.

In 2023, both Meituan and Ele.me, the industry’s two largest players, saw profits surge. Meituan’s revenue hit $10 billion, a 26% increase over the previous year, while Alibaba’s local services division, driven largely by Ele.me, reported $8.3 billion in revenue, up 19% from the prior year.

However, delivery workers’ earnings have significantly declined. A report from the China New Employment Research Center revealed that last year, workers made an average of 6,803 yuan ($956) per month, nearly 1,000 yuan ($140) less than five years ago, despite working longer hours.

While this may not seem like a large difference in U.S. dollars, a loss of 1,000 yuan is significant in China, where the average monthly wage is 1,838 yuan ($258).

For example, Lu Sihang, 20, works 10-hour shifts, making about 30 deliveries per day, earning between $30 and $40 per shift. To meet the $950 average, Lu must work almost every day.

China’s “downgraded consumption” is largely to blame. As the economy slows, consumers are cutting back on spending, even on essentials like food. Restaurants are forced to lower prices to attract customers, which cuts into delivery workers’ pay since their income is based on commissions. Tipping, already uncommon, becomes even less likely in tough economic times.

With fewer job opportunities available, competition among delivery workers is fierce. China’s youth unemployment rate hit 18.8% in August, the highest since the government changed its reporting methodology to exclude students.

“When there’s a large supply of workers, their bargaining power weakens, and the limited number of delivery orders must be shared among them,” said Ng.

It wasn’t always this way. According to the China Labour Bulletin, a Hong Kong-based NGO, delivery apps initially offered higher wages to attract enough workers as they expanded. But as the platforms monopolized the market and introduced algorithms to control the labor process, workers lost many protections and much of their autonomy.

Many restaurants don’t charge a delivery fee, and some even offer cheaper deals for delivery than for dining in or picking up.

Another issue is that delivery workers are classified as freelancers and paid per trip, rather than earning a steady monthly salary. This incentivizes them to take risks, like ignoring dangerous road conditions, to maximize their earnings.

Just last week, Chongqing Broadcasting Group aired footage of a delivery driver crashing his scooter into a car at an intersection in Hunan province after running a red light.