UPDATED 22:52 EST / JULY 26 2021

POLICY

China cracks down on food delivery platforms with new workers’ rights

China today issued new rules that will offer various protections to its food delivery workers, a move that’s part of a wider regulatory crackdown on the tech industry in the country.

China’s Ministry of Industry and Information Technology said today the wider crackdown is designed to deal with ongoing problems in the industry, ranging from how companies use people’s data to how certain apps can be misleading to how companies engage in monopolistic behavior.

For a long time, China’s food delivery companies have come under scrutiny for how they treat their drivers, which only mirrors how a lot of people see food delivery services in other countries. Now the State Administration for Market Regulation, along with other agencies, have put rules in place which may prevent any wrongdoing.

Delivery companies will now have to pay their drivers at least the minimum wage, while drivers’ rights will have to be protected in view of what the algorithm expects of them. The guidelines state services should “appropriately relax delivery time limits” and give drivers only a “reasonable” number of deliveries to complete. Companies will also be expected to provide insurance for all their drivers.

In recent months, delivery services have been criticized for doing the opposite, giving drivers difficult routes and impossible timelines. That has not only led to drivers being penalized but it’s also thought to have resulted in accidents. Reports state that most of the drivers that work for such companies do not have insurance.

The largest delivery service is the Tencent Holdings Ltd.-backed company Meituan. In a statement, the company said it would “resolutely implement” what the government has asked in an effort to “effectively enhance labor rights.”

That seems to have given some investors the jitters, with Meituan seeing its stock price nosedive 15%. Investors are now concerned that the cost of employing drivers under the new guidelines will be too steep. Meituan is also currently under investigation for possible anticompetitive practices.

Ele.me is the second largest food delivery firm, backed by The Alibaba Group Ltd. The company has yet to comment on the matter.

Photo: Joshua Fernandez/Unsplash

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