Rethinking Labor Protection: The Rise of Flexible Employment in China

The paper explores the rise of new employment forms in China driven by digital platforms, highlighting opportunities for marginalized workers but also significant challenges in labor protection and job security. It calls for comprehensive reforms to ensure adequate worker protections in this evolving labor market.

A working paper authored by Tu Wei from the International Labour Organization (ILO) Country Office for China and Mongolia, and Wang Xueyu, a Ph.D. candidate at the University of Toronto's Centre for Industrial Relations and Human Resources, explores the significant rise of new employment forms (NFE) in China. These forms of employment, which have rapidly expanded since 2015, differ substantially from traditional full-time employment models. The proliferation of digital platforms has created a flexible, technology-driven labor market, distinct from the Fordist era's rigid employment structures. The study, conducted under the ILO, highlights how the integration of digital technologies such as smartphones, mobile payments, and artificial intelligence, alongside supportive government policies, has led to the emergence of app-based gig work, micro-task crowdsourcing, prosumer activities, and platform outsourcing to individuals.

Flexible Employment for Marginalized Workers

China’s NFE has not only transformed its labor market but has also significantly expanded job opportunities for marginalized and underemployed populations. These include rural migrants, young people, women, and the low-skilled, many of whom have found employment through the ease of entry into this new labor system. This new flexibility in working hours and job conditions appeals to a broad spectrum of workers, offering them greater freedom than the traditional full-time employment model, which was once predominant in China. The low barriers to entry have particularly attracted workers from the secondary labor market, such as those migrating from rural to urban areas in search of better livelihoods. Many of these workers, including food delivery riders and online taxi drivers, have been able to earn a living with relatively higher incomes compared to previous informal employment opportunities. However, this shift has created significant challenges for China’s labor protection systems, as these new employment forms often lack the standard protections offered by traditional full-time employment.

Lack of Social Protections and Job Security

A major issue arises from the fact that many workers in NFE are classified as independent contractors or self-employed, meaning they are excluded from labor protections typically associated with formal employment. The lack of formal labor contracts, ambiguity in the employer-employee relationship, and the informal nature of much of the work contribute to a lack of social security coverage, minimal job security, and limited protection of workers' rights. This situation deviates from the standard labor contract system that dominated China’s labor market prior to the rise of the digital economy. These workers, although earning income, often face precarious working conditions with little access to social insurance schemes or benefits such as healthcare and pensions. Moreover, the absence of traditional worker-employer relationships complicates workers' ability to assert their rights or demand better working conditions, and the role of trade unions in NFE remains minimal. This creates a situation where workers, despite earning relatively higher wages, have to exchange poor labor protection for income, resulting in a highly unregulated and uncertain work environment.

Diverse Forms of Digital Employment

The study highlights several categories of NFE that have emerged in China. These include location-based gig work, such as ride-hailing and food delivery services, where workers perform tasks in specific locations facilitated by digital platforms. Another category is online micro-task crowdsourcing, where workers complete small digital tasks such as data labeling or questionnaire filling. The prosumer model, where individuals create and share content on social platforms for potential revenue, is also a growing form of employment. Lastly, platform outsourcing involves companies contracting tasks directly to individuals through third-party platforms. Each of these forms of employment provides income opportunities, but they come with minimal job security, irregular work, and a lack of standard labor protections. The COVID-19 pandemic has further accelerated the adoption of these employment models, as more workers have shifted to online platforms due to economic pressures and lockdown measures.

Challenges for Labor Regulation

Despite the economic benefits brought by NFE, the authors argue that China’s existing labor laws, which are based on more traditional employment structures, are ill-equipped to regulate these new forms of work. One of the key challenges is the difficulty in determining the nature of employment relationships in the platform economy. Since workers are often engaged in contract-based relationships with platforms rather than direct employment, this blurs the lines of responsibility for their welfare and legal protections. The rigidity of China’s social security system, which is closely tied to formal employment, also leaves many workers in NFE without access to essential benefits. Additionally, the paper points out that traditional regulatory instruments are inadequate in addressing the platform business model, where algorithms and data-driven management often control workers, replacing human supervisors and making regulation more complex.

Reforming Worker Protections for the Future

In response to these challenges, the Chinese government has begun to explore regulatory reforms to better protect workers in NFE. Policies such as piloting occupational injury insurance for gig workers and revising trade union laws to include more flexible forms of employment are steps in the right direction. Additionally, some digital platforms have introduced supplementary social security schemes and have started engaging workers to improve algorithms and working conditions. However, the authors conclude that more comprehensive reforms are needed to ensure that workers in the NFE sector receive adequate protection. Addressing the issues of employment relations, improving working conditions, and enhancing worker representation and voice are critical to ensuring that the benefits of NFE are shared more equitably and sustainably across the labor market.