(Bloomberg) — Didi Global Inc. is helping workers establish their first union, a groundbreaking decision its fellow tech giants may soon follow as China imposes rules to curb excessive work and protect millions of blue-collar workers from exploitation.
The Beijing-based ride-hailing giant announced the creation of the union on an internal forum last week without specifics, according to people familiar with the matter. Didi drivers — mostly part-time and lacking full employee benefits — will likely be invited to join, one of the people said, requesting anonymity discussing private information.
Peers including food delivery leader Meituan are also studying the feasibility of internal labor rights organizations, another person said. Employees from Alibaba Group Holding Ltd. have posted calls for the formation of a union on their own company forum, a third person said. Billionaire Richard Liu’s e-commerce empire JD.com Inc. also established a union this week, the Workers’ Daily, the official newspaper of China’s umbrella union organization, reported late Wednesday.
Tech giants like Didi are responding to regulators’ demands that sharing-economy behemoths improve the welfare of millions of low-wage workers they depend on to power growth. That stems from Xi Jinping’s “common prosperity” campaign to get the private sector to share the enormous wealth accumulated during a decade-long internet boom, while reining in their growing influence. In Didi’s case, the move may curry favor with Beijng at a time it’s said to be fighting to ensure its survival after forging ahead with a $4.4 billion IPO over regulators’ objections.
While embryonic — and a reversal of the usual bottom-up process of change — support for effective unions marks a significant step for China’s hard-charging tech industry. The mobile boom has minted an unprecedented amount of tech billionaires from Alibaba’s Jack Ma to Didi’s Cheng Wei and Wang Xing of Meituan, many of whom are now keen to show they’re giving back. Didi’s shares surged 12% in New York, leading a rally in Chinese tech stocks.
Gig-economy workers from Silicon Valley to India have in recent years become increasingly vocal in protesting their rights, gaining the attention of politicians. In China, the issue came to the fore more recently, following years of breakneck expansion by the likes of Meituan, Alibaba, Full Truck Alliance Co. and Pinduoduo Inc. into fledgling arenas from community commerce to meals and grocery delivery.
Didi and Alibaba didn’t respond to written inquiries seeking comment. A Meituan representative didn’t comment on unions but said in an emailed statement it’s focused on listening to and helping out its delivery riders.
Read more: Didi Said to Weigh Giving Up Data Control to Appease Beijing
Didi, now under investigation over data privacy violations, made its internal announcement just after China’s top court and labor ministry published a lengthy essay outlining 10 cases — including but not limited to the tech industry — in which employees were forced to work extra hours or put in harm’s way, using real and richly detailed court disputes to demonstrate how to fight against labor rights violations.
The essay was viewed as a fresh warning toward tech’s heavyweights, many of which are known for punishing demands and unreasonable overtime. It adds to the challenges for an industry already weathering heightened scrutiny over everything from their troves to data to endemic issues such as forced drinking during official functions.
China’s tech workers face immense pressure to log long hours to meet exacting deadlines while often lacking clear legal recourse — in contrast with Silicon Valley, where icons including Apple Inc., Google and Intel Corp. have paid hundreds of millions of dollars to settle a class-action lawsuit filed by workers. Alibaba’s Ele.me and Meituan have weathered criticism about harsh treatment of gig-economy workers, after several deliverymen were killed or injured trying to meet strict deadlines.
Read more: China Spells Out How Excessive ‘996’ Work Culture is Illegal
The history of unions in China dates back to 1921, when a then-fledgling Communist Party converted workers into Marxist followers. Today, they’re mostly offshoots of the government-backed All-China Federation of Trade Unions, which has lost much of its effectiveness, according to Aidan Chau, a researcher at the Hong Kong-based China Labour Bulletin.
Robust unions have been virtually non-existent among China’s internet companies, partly because of a government abhorrence toward self-organized citizens’ groups that could undermine the Party’s power. The lack of collective bargaining power has made it challenging for many to get heard. In one widely debated case, a delivery driver for Alibaba’s Ele.me set himself on fire to protest unpaid wages.
Xi has since 2013 called on the ACFTU to reform and take a more active role in achieving his “China Dream,” Chau said, a precursor to his current “Common Prosperity” mantra.
Read more: Xi Tests ‘Common Prosperity’ Policies in Alibaba’s Home Province
A guidance document jointly issued recently by the federation and seven other agencies hinted at changes on the horizon. Unions could serve as a bridge between gig workers and so-called platform companies, helping facilitate negotiations on commissions, they said.
Beijing hopes unions can play a key role in closing a policy loophole in labor protections across the booming sharing economy, particularly as Beijing enacts strict new regulations. Among other things, the government intends to impose a cap on the commissions that ride-hailing or meal delivery providers charge their drivers or merchant partners.
“Establishing new unions in major tech companies can be seen as a continuing push in that direction,” Chau said in an email. “We have seen unions being set up in food delivery companies, courier companies and now internet companies. But from past experience, these unions do not organize workers, so that workers become a class conscious subject and form a combatant organization.”
Read more: Didi Slumps as China to Regulate Ride-Hailing App Commissions
(Updates with Didi share action and JD union from the second paragraph)
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