Why Chinese tech giants are setting up unions

The union for ride-hailing platform Didi was announced on an internal forum in August. PHOTO: REUTERS

SHENZHEN (REUTERS) - Chinese technology giants Didi Global and JD.com have set up unions for their staff in landmark moves in China's tech sector, where organised labour is rare.

E-commerce company JD.com established its trade union last week, according to a newspaper affiliated with the Beijing Federation of Trade Unions, while the union for ride-hailing platform Didi was announced on an internal forum last month, two people familiar with the matter told Reuters.

Why are the tech companies establishing unions?

Didi and JD.com have been the biggest tech companies in China to establish company-wide unions to date, though the authorities in a county in Hubei province said in June that local subsidiaries of delivery companies Meituan and Ele.me, owned by Alibaba, have also established unions.

The government is encouraging companies to implement initiatives to share wealth as part of a recent "common prosperity" drive laid out by President Xi Jinping to ease inequality in the world's second-largest economy.

The Communist Party of China is preparing for major political meetings in November as it reviews its development over its 100 years of existence, with the meetings expected to outline the government's vision for the country's economy.

Ahead of this, China's tech titans have been facing a multi-pronged crackdown across sectors such as gaming, the sharing economy, cloud computing, algorithms and initial public offerings.

While the country's private-led tech sector has developed with a relatively light touch from regulators over the last decade, some work culture practices appear to be coming in for greater scrutiny.

Many of the companies rely on flexible workers who number 200 million nationwide, according to state media.

Didi, which provides 25 million rides a day, has been criticised by state media for not paying its drivers fairly. In April, it said it would set up a drivers committee to improve income stability and transparency over wages.

It is also the subject of an investigation launched by several Chinese regulators on the heels of its US$4.4 billion (S$5.9 billion) United States stock market listing.

Last month, China's top court said the overtime practice of "996", working 9am to 9pm six days a week, a policy common among many Chinese tech companies, was illegal.

What is the role of labour unions in China?

Labour unions have a central place in the Communist Party's proletariat beginnings, and workers' rights have grown in importance as China moved from a planned economy to a more market-oriented one. The country boasts the biggest union in the world, the All-China Federation of Trade Unions (ACFTU), a state-run body.

All unions in China are required to register with the ACFTU and have largely been confined to sectors such as manufacturing and transport.

However, ACFTU's track record in negotiating better terms for workers has often been criticised.

Mr Aidan Chau, a researcher at the Hong Kong-based China Labour Bulletin, said that China's unions rarely directly challenge how companies treat their workers, focusing instead on matters such as alleviating employee grievances and promoting work safety.

Mr Xi is reported to have criticised the ACFTU behind closed doors as early as 2013 for not doing more for workers, according to academics and former union cadres, and told ACFTU to "break new ground" in supporting workers and unions in November 2018.

Yet support for unions has been less clear in practice.

Also in late 2018, protests over sacked workers at Jasic International, a welding machinery manufacturer in the southern city of Huizhou, led to detentions of the student activists who were involved in the protests, and two trade union officials who helped set up the union.

Since then, labour rights groups have faced increased police harassment and intimidation, several people formerly involved in rights groups have told Reuters.

What are the new unions expected to achieve?

In July, the ACFTU and seven other top Chinese government bodies published guidance about safeguarding the rights of gig economy workers and suggested that unions could play a role in helping to negotiate with companies, mediate disputes and provide legal aid for workers.

It remains unclear what the exact aims are of Didi's union, while JD.com said that some of its local units have created unions in recent years, and the new group-level union will help them with planning and coordination.

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