New govt rule impacting dynamics between ride-hailing platforms and drivers
DiDi et al. asked to take better care of workers
Before DiDi yesterday morning announced delisting from the New York Stock Exchange and preparation of listing on the Hong Kong Stock Exchange, eight Chinese ministries led by the Ministry of Transportation published on Tuesday, November 30 关于加强交通运输新业态从业人员权益保障工作的意见 Opinions on Strengthening the Protection of the Rights and Interests of Workers in New Forms of Transportation Business.
It’s not that the two events are related, but that the ride-hailing sector is certainly in the news - and the government regulation may have a longer impact on the entire sector, which is why this newsletter features a translation of the regulation and some brief observations. And this will be somewhat similar to the Guidelines on protecting the rights and interests of workers in new forms of employment, which Pekingnology published on August 23.
Before we go, it’s pretty clear that the Chinese authorities intend to promote the rights and interests of drivers in the Uber-like business. Whether drivers for Uber and DiDi shall be treated as formal employees or independent contractors is a question that decision-makers from California to China are grappling with.
What to call them is the first thing that caught your Pekingnologist’s attention: the Chinese word here is 从业人员, basically the people engaged in the profession which this newsletter puts as workers for the sake of brevity, rather than the traditional word 职工 employees which would denote a sense of the traditional employment.
Opinions on Strengthening the Protection of the Rights and Interests of Workers in New Forms of Transportation Business
To implement the decisions and plans made by the Central Committee of the CPC and the State Council, better protect the rights and interests of workers engaged in new forms of the transportation business, promote the standardized, healthy, sustained, and high-quality development of new forms of the transportation business, and serve the people, the opinions hereunder are put forward.
Guided by the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, efforts should be made to fully implement the guiding principles of the 19th National Party Congress and the second, third, fourth, fifth and sixth plenary sessions of the 19th Central Committee, follow the general principle of pursuing progress while ensuring stability, ground our work in this new stage of development, apply the new development philosophy accurately and comprehensively, foster a new pattern of development, follow a people-centered development philosophy, apply systems thinking, and place equal emphasis on development and security.
Focusing on the most pressing and most immediate issues that concern the rights and interests of workers in new forms of transport business, we address both the symptoms and root causes, improve the governance system, put effort into regulating the operations of enterprises in new forms of transport business, maintain the market order for fair competition, establish a sound system for protecting the rights and interests of workers, create an environment conducive to the profession, protect legitimate rights and interests of workers, and promote the standardized, healthy, sustainable, and quality development of new forms of the transportation business.
Improve the mechanism for income distribution for platforms and workers. Relevant local government departments should urge and supervise online ride-hailing service (hereinafter referred to as online ride-hailing) platform companies to make rules of pricing and income distribution public to drivers, passengers, and other related parties.
After each order is fulfilled, the driver’s side (of the ride-hailing platform app) should display simultaneously the total amount paid by the passenger, the driver’s remuneration (from the order), and the ratio of their difference divided by the total amount paid by the passenger (commonly known as “commission rate”) in order to protect the driver’s right to know and oversee.
Note: From experience on the ground in China, the ride-hailing driver doesn’t typically know how much the passenger paid after the end of the ride. So this new rule, written in an excruciatingly detailed fashion, should force a change and increase transparency.
We should urge and supervise online ride-hailing platform companies to strengthen communication with local trade union organizations and industry associations, set a reasonable upper limit on the commission rate and publish them on mobile apps and the media. We should urge and supervise online ride-hailing platform companies to publicly solicit the opinions of workers’ representatives, trade unions, and industry associations before determining and adjusting business strategy such as pricing rules and income distribution rules, and make them public to society one month in advance.
We should support workers in taking part in social security. We will improve the work of social security agencies so that workers engaged in new forms of the transportation business enjoy convenience and accessibility to take part in social security and enjoy the benefits. We should strengthen the protection of online ride-hailing drivers against occupational injuries, encourage online ride-hailing platform companies to participate in pilot programs for protection against occupational injury, to ensure the work safety of online ride-hailing drivers during the service period. We should urge and supervise online ride-hailing platform companies to arrange social security for online ride-hailing drivers with whom their relationship fits employment according to law, and guide and support online ride-hailing drivers whose relationship with the platform companies do not fit employment take part in appropriate social security schemes.
1) This is not a book about China’s social security system but basically, some of the drivers would meet the threshold which effectively enables them to subscribe to social security schemes open to full employees, and some - obviously a larger share - wouldn’t and the government here is trying to facilitate their enrollment into some other schemes that provide less - but still some - benefits. The platform companies will have to contribute their share, per the requirement of the different schemes.
2) The pilot programs for protection against occupational injury, according to Xinhua in Chinese,
is likely an insurance-like scheme where platform companies, insurance companies, and the government pool some money together to compensate for these flexible drivers’ injuries from work.
3) Note the mandatory public disclosure for a lot of information that would usually be considered sensitive to a business. And a sort of collective bargaining is required of the local chapters of All-China Federation of Trade Unions to balance with the management.
Ensure fair work remuneration for workers. Competent administrative departments, trade unions, industry associations, etc. should keep abreast of the industry operations and the level of work remuneration for online ride-hailing drivers, and publish them at appropriate times to guide drivers to have reasonable expectations for income. Trade union organizations at all levels should discuss with online ride-hailing platform companies and industry associations to determine rules and standards for the calculation of drivers’ work remuneration based on the nature of work, labor intensity, tasks, loca average wages, operating conditions of the market, etc., and make them public to society. We will urge and supervise online ride-hailing platform companies to pay work remuneration not lower than the local minimum wage standard to online ride-hailing drivers who work in a regular fashion.
1) Translation of the last sentence is a bit tricky. Basically, the local minimum wage applies to drivers who work in a fashion that can be compared to a formal employee.
2) Again: note the mandatory public disclosure for a lot of information that would usually be considered sensitive to a business, and a sort of collective bargaining is required, mandating the local chapters of the All-China Federation of Trade Unions to balance with the management.
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Ensure reasonable arrangements for workers’ resting. Relevant government departments in all regions should urge and supervise online ride-hailing platform companies to scientifically determine the length of working hours and labor intensity of drivers, ensuring that drivers have sufficient time for rest. We should urge and supervise online ride-hailing platform companies to optimize the mechanism for allocating orders to improve the operational efficiency of vehicles during their in-service time, and it is not allowed to tempt drivers to work overtime through rewards for extra orders and so on.
Note: The experience on the ground is, at least in the early years, the platforms reward drivers for finishing many orders, and the rewards rose as they finish increasingly more. For example, one gets an extra 10 yuan for finishing 10 orders, but probably an extra 30 yuan for finishing 20 orders.
Improve the work environment and working conditions. Relevant government departments in all regions should optimize the approval process for the convienence of online ride-hailing platform enterprises, vehicles and drivers who meet the qualifications to access the market. Efforts should be made to establish comprehensive service areas for taxis and their ride-hailing peers, and temporary parking areas in hospitals, heavily residential areas, important commercial districts, comprehensive transport hubs, etc. Cruising taxis and online ride-hailing vehicles will be allowed to park temporarily for dining, parking, going to the toilet, etc.
We will urge and supervise online ride-hailing platform companies to step up the education and training for workers regarding vocational skills, labor safety, and services, and tighten the management of contractors. It is forbidden (for platform companies) to use high-value deposits or cash deposits to shift operational risks (to drivers). It is forbidden to link the assessment of drivers’ services to their servie hours, order allocation mechanism, etc. It’s forbidden to illegally obstruct the drivers’ free choice of platforms, or do so in a disguised manner.
Note: The last sentence brings to mind the SAMR’s anti-monopoly penalty against the practice of “Choose One from Two”. Chinese government rules appear to continuously emphasize that big platforms - whatever sector they are in - shall not use anti-competitive measures against the small guys’ freedom of choice in whom they do business with.
Provide better care for workers. Relevant government departments in all regions should pay close attention to the difficulties and problems faced by workers engaged in the new forms of the transportation business in their work and life, and provide assistance to drivers in various forms accordingly. Companies in new forms of the transportation business will be encouraged to provide better compassionate care for workers, and establish a reward system for outstanding workers to raise their sense of belonging and professional honor.
Promote the development based on compliance of online ride-hailing platform companies. Transportation authorities in all regions should urge and supervise online ride-hailing platform companies to abide by laws and regulations and not engage drivers and vehicles that have not obtained the permit for online ride-hailing services. We should urge and supervise online ride-hailing platform companies to require the provision of the permits of the drivers and the vehicles when registering new drivers and vehicles. Those who are unable to provide permits shall not be registered, and shall be notified to apply for corresponding permits in accordance with laws and regulations. We should crack down on illegal operations and it is encouraged to apply information technology-based means to strengthen law enforcement in a targeted manner.
Maintain the market order for fair competition. We will strengthen the supervision of enterprises engaged in new forms of the transportation business across the board, step up efforts to monitor the operation of the new forms of the transportation business, give early warning of monopoly risks, and intensify supervision and law enforcement to deter monopoly and unfair competition.
We will prevent the disorderly expansion of capital in the field of new forms of the transportation business, and investigate and punish illegal activities such as dumping, big data-based price discrimination, and fraud in accordance with the law.
We will ensure enterprises engaged in the new forms of the transportation business shoulder their responsibility, guide the enterprises to enter into fair competition on their own initiative, and encourage enterprises to proactively make public commitment on fair competition and credibility.
Note: Didi is still off the app stores in China, and its rivals have not rested in expansion in the months.
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We should ensure channels for complaints and whistleblowing. We should bring into full play the role of the supervision hotline 12328 for transportation service and hotline 12315 for the protection of consumer rights, handle complaints and whistleblowing cases, in a timely manner, from the workers and the general public regarding arbitrary charges, arbitrary fines, illicit law enforcement, etc. by the administrative departments, and make public the results of the handling of every compliant and case in a timely fashion.
We will urge and supervise enterprises engaged in the new forms of the transportation business to not pass the buck on complaints made by workers and consumers and accept and handle them on time, in an effort to safeguard the legitimate rights and interests of the workers and consumers.
Strengthen the supporting role of trade union organizations. Trade union organizations in all regions should regard online ride-hailing drivers as a key group for promoting the establishment of and admission to trade union organizations, open up the channels for joining the trade unions, admit the workers engaged in new forms of the transportation business to the trade unions to the greatest extent, build a platform of communication between the workers and the enterprises engaged in new business forms, and explore the establishment of a consultative mechanism on an equal basis between them.
Improve the coordination mechanism. We will give full play to the role of the inter-ministerial joint meeting mechanism for coordination and supervision of new forms of the transportation business, promote the articulation and coordination of policies, and coordinate and solve the problems relating to the protection of the rights and interests of workers engaged in new forms of the transportation business in a timely fashion. Local authorities should establish or improve the joint meeting mechanism for multi-departmental coordination and supervision at the provincial and prefecture levels before the end of 2021, regarding the inter-ministerial joint meeting mechanism for coordination and supervision of new forms of the transportation business.
According to a 2018 notice from the General Office of the State Council, the inter-ministerial joint meeting mechanism for coordination and supervision of new forms of the transportation business involves 11 central ministry-level organs, with the Ministry of Transporation playing the leading role.
Ensure that all parties fulfill responsibilities. Local authorities should earnestly fulfill the responsibility of protecting the rights and interests of workers engaged in new forms of the transportation business in places within their jurisdiction, strengthen holistic planning and coordination, release detailed tasks and measures, and ensure implementation.
We will work to ensure that enterprises engaged in the new forms of the transportation business fulfill the primary responsibility of protecting the rights and interests of workers. For the various types of workers who are directly managed by enterprises engaged in the new forms of the transportation business and organized by the cooperative parties, the enterprises engaged in the new forms of the transportation business should fulfill the primary responsibility of protecting their rights and interests of following laws and regulations.
We will urge and supervise enterprises engaged in new forms of the transportation business to expressly inform workers of the relevant rights and obligations as well as laws and policies relating to labor security, and facilitate their implementation. Labor contracts should be signed in accordance with the law if the employer establishes labor relations with the worker.
We should strengthen publicity and guidance. We should step up efforts to publicize and interpret policy, and increase the publicity of positive news such as the enterprises fulfilling their social responsibility, providing care for workers, and exemplary deeds by workers. We will organize the publicity event of “model taxi/(ride-hailing) driver”, tell typical stories well and build up positive energy in the industry.
Lastly, you are invited to read the Aug. 23 Pekingnology newsletter translating and explaining the 关于维护新就业形态劳动者劳动保障权益的指导意见 Guidelines on protecting the rights and interests of workers in new forms of employment, which covers more sectors.