Leading ride-hailing app in China, Didi Chuxing, has set up a union for its staff. Simultaneously, ecommerce giant JD.com has also allowed its employees to unionise. These moves mark a landmark shift in China’s tech industry, where it has traditionally been very difficult to form labour unions.

Didi’s union was first announced in an internal forum last month, which said that it will initially be managed by employees at its Beijing headquarters and will be guided by the government-run All China Federation of Trade Unions (ACTFU), Reuters reported citing people familiar with the matter.

Separately, JD.com established a trade union this week, a newspaper affiliated with the Beijing ACTFU reported. JD.com confirmed the news with Reuters, saying that some of its local units had created unions in past years, and the new union – set up at the group level – will facilitate coordination planning and resource distribution.

In recent months, regulators in China have come down hard on the country’s technology industry, criticising them for exploiting workers and consumers, and for monopolistic practices.

Ride-hailing giant Didi, for instance, became the target of several government investigations a few days after its $4.4bn US stock market listing.

The company has long been reprimanded for not paying drivers fairly. In April, it said it would set up a drivers’ committee to improve income stability and transparency. Earlier this month, the company announced that it had added a new feature to its driver app, which provides a detailed breakdown of a driver’s income for each ride and the share a driver earns from each passenger payment over a seven-day period.

On Thursday, Chinese regulators summoned 11 ride-hailing firms, including Didi, Geely’s Caocao and Meituan’s ride-hailing unit, to a meeting with the transport ministry to discuss points of concern in the sector, Reuters reported.

At the meeting held on Wednesday, authorities highlighted the hiring of unqualified drivers and the use of promotions that disrupt fair market order, the ministry said in a statement.

Didi and JD.com are believed to be the biggest tech firms to date to have established company-wide unions, though authorities in the county of Shishou in China’s Hubei province said in June that local subsidiaries of Meituan and Alibaba’s Ele.me had established unions, Reuters reported.

Labour unions in China

Following China’s booming gig economy, grievances among the millions of workers have also burgeoned. The number of protests by gig economy workers has risen both in absolute terms and as a share of overall labour unrest, according to China Labour Bulletin, a Hong Kong-based NGO. In 2019, it recorded 142 protests by food-delivery, logistics and transport workers.

The Chinese Communist Party (CCP) response has been to try and persuade gig workers to join an official trade union. In 2015, President Xi Jinping launched a plan for “experimental reform” of the ACFTU, aiming to make the federation focus on concrete measures to help workers and to reduce “instability” and discourage protests.

In July, the ACFTU and seven other top Chinese government bodies published guidance about safeguarding the rights of gig economy workers and suggested unions could play a role in helping negotiate with firms.

Regardless of reforms, trade unions remain a wing of the CCP and union officials are considered civil servants. In other words, they are not allowed to do anything that goes against government policy.

“The most important task of local governments isn’t to protects workers’ rights, it is to maintain social stability and ensure economic development,” Chris Chan of the Chinese University of Hong Kong told The Economist.

The ACFTU is the largest trade union in the world, with 302 million members in 1,713,000 primary trade union organisations. It is China’s only legally permissible trade union, and attempts to form trade unions independent of the ACFTU have been rare and short-lived.

As a result, the International Confederation of Free Trade Unions maintains that the ACFTU is not an independent union, stating that it “cannot be regarded as an authentic voice of Chinese workers.”

Workers vs the gig economy in the West

Labour representation among gig economy and tech workers is not a problem unique to China. Seattle-headquartered ecommerce titan Amazon has repeatedly been criticised for not allowing its warehouse workers to form labour unions.

Earlier this year, it fought back against attempts to form the first US-based Amazon warehouse staff union. In the end, the company was involved in a massive text messaging scandal, allegedly faking employee Twitter accounts and a mailbox for unionisation votes. The case was heard by the National Labor Relations Board.

Similarly, ride-hailing apps such as Uber and Lyft have come under fire for their treatment of drivers. There have been complex legal and political battles over the issue in various jurisdictions: a recent court ruling said that a new piece of Californian employment law known as Proposition 22, intended to undo recent legislation, was “unconstitutional”.

The Proposition – a ballot initiative passed during the November 2020 elections – was a response to Assembly Bill 5, which required gig economy workers such as Uber drivers to be reclassified as employees, not self-employed workers.

Uber, Lyft, DoorDash and Instacart didn’t like Assembly Bill 5, fearing it would cut away a massive chunk of their margins, and the companies spent large sums promoting Proposition 22. The ride-hailing companies had previously warned that they would pull out of California if it was passed, arguing that classifying drivers as employees would make their running costs unsustainable.

Meanwhile on Tuesday, Massachusetts Attorney General Maura Healey gave ride-hailing services, including Uber and Lyft, the green light to start collecting signatures needed to put a proposed ballot measure before voters that would define drivers as independent contractors rather than employees.

Over in the UK, Deliveroo won a legal battle in June over the employment status of its riders. The ruling by the UK Court of Appeal clarified the legal criteria for gig economy companies classing drivers as independent contractors who are self-employed, meaning that Deliveroo riders will not be entitled to a minimum wage and other benefits reserved for employees.