Entering ChinaTakeaway is back in the air!
Since February 19, Meituan, JD.com, and Ele.me have announced the news of paying social insurance for food delivery riders. JD.com proposed to gradually pay five insurances and one housing fund for JD.com’s full-time takeaway riders; Meituan said it would start paying social security for full-time and stable part-time riders nationwide in the second quarter of this year, that is, in April; Ele.me said it would launch a pilot project in some cities across the country to pay social security for riders.
However, on February 24, JD.com announced that it would go further, saying that all the costs of the newly contracted full-time delivery riders to pay five insurances and one housing fund, including the part that individuals need to pay, will be borne by JD.com; On February 25, it was announced that couriers and full-time delivery riders would be connected to each other, and JD delivery riders and JD couriers could voluntarily apply for conversion with each other.
However, these moves have also sparked heated discussions in the industry. Compared with Meituan and Ele.me’s pilot explorations under the guidance of the Ministry of Human Resources and Social Security and other competent authorities, JD.com’s social security plan is also much more radical, which also means high costs for enterprises.
Is it sustainable to bear the full cost of social security?
According to the plan announced by JD.com on February 19, that is, from March 1, 2025, it will gradually pay five insurances and one housing fund for full-time riders, adopting the “enterprise directly bears” model.
Judging from the timeline of the official launch, on the track guaranteed by riders, JD is undoubtedly the first to “rush”, which is of great significance to the entire industry.
External predictions have predicted that JD.com will only pay social security for full-time riders (excluding the existing 1.3 million riders), and this social security plan is estimated to cover 10,000-20,000 riders.
However, the subsequent announcements of “express delivery riders and delivery riders switch to each other” and “bear all social security costs for newly contracted full-time delivery riders” also caused speculation: How many delivery riders can be covered by JD.com’s social security plan? What is the labor cost of the new annual expenditure?
Judging from major media reports, JD.com has not officially announced the number of existing full-time delivery riders, the number of newly signed delivery riders, and the scale of “couriers converted to full-time delivery riders”, which also makes it difficult for the outside world to accurately know the number of coverage and cost input.
However, according to the “equal pay for equal work” standard for express delivery and takeaway proposed in JD.com’s announcement, it can be deduced that JD will bear all the costs of “five insurances and one housing fund” for the existing 1.3 million takeaway riders.
Taking Beijing City, where Jingdong’s headquarters is located, as an example, the lower limit of the social security payment base is 6821 yuan, if combined with the proportion of endowment insurance, unemployment insurance, work-related injury insurance, medical insurance and individual and enterprise bearing, as well as the proportion of housing provident fund of 5% of individual enterprises, the common cost of this part of the individual + enterprise is about 3232.52 yuan / month.
According to this calculation, the total cost to be borne by JD is about 52.2 billion yuan per year. In contrast, Dada Group’s total revenue in 2023 will be 10.51 billion yuan, which means that if food delivery riders want to achieve the same “equal pay for equal work” as the courier brother, they also need to rely on the “blood transfusion” at the level of Jingdong Group.
According to JD.com’s financial report, its net profit for the whole year of 2023 will be RMB 24.2 billion, which is estimated to be more than twice the profit of JD.com.
According to this calculation method, JD.com bears all the costs of social security for 1.3 million delivery riders, which is obviously unrealistic. Although JD.com has not yet given an explanation, the more likely solution is that, as initially speculated by the industry, it will cover tens of thousands of full-time riders, so that the cost is relatively more controllable.
In addition, according to the analysis of Zhang Chenggang, an associate professor at the School of Labor Economics of the Capital University of Economics and Business, JD.com’s Dada platform has about 300,000 daily active riders, of which the proportion of full-time riders is currently unknown. Previously, after JD.com acquired Debang, it paid social security for about 60% of Debang’s couriers (that is, full-time couriers accounted for about 60% of all couriers). If the proportion is still 60% this time, JD.com is expected to pay social security for about 180,000 food delivery riders under the Dada platform.
By analogy, according to the monthly income of the takeaway rider of 4,500 yuan as the payment base, as well as the proportion of personal burden of social security part of 10% and the proportion of company burden of 26%, if JD bears all the social security costs for 180,000 takeaway riders, the monthly new expenditure will be about 290 million yuan, and the annual increase will be nearly 3.5 billion yuan.
From the perspective of cost input, this plan with an annual investment of 3.5 billion yuan is also more in line with reality. However, this is obviously a big gap from the initial speculation of “social security for 1.3 million delivery riders”, which has shrunk to nearly one-fifth.
Social security for millions of riders is a “troublesome thing”
With the booming Internet economy, the food delivery industry has become an indispensable part of urban life, and riders are an important part of the food delivery ecology.
Problem 1: The identification of labor relations for various types of riders, such as special delivery, crowdsourcing, happy running or preferred, is complex, and without a clear identification of labor relations, the protection of labor rights and interests is like a tree without roots.
As we all know, the composition of food delivery riders is complex, highly mobile, disorderly, and uncertain, making it difficult to identify the subject of labor relations. In addition, there has always been a gap in the system on how to pay social security for new employment groups. Taking the pension insurance system as an example, it is coordinated by the provincial level, which is difficult to adapt to the actual needs of riders for cross-regional labor, and the difference between urban and rural areas exacerbates the complexity of the problem.
To put it simply, the root cause of the difficulty of food delivery platforms in paying social security for riders lies in the deep contradiction between the complexity of the rider group and the rigidity of the current social security system. The platform wants to insure the rider, and it is difficult to determine even the most basic identity of the insured subject, where should the social security be paid? How do I pay for it?
Problem 2: For the group of riders who pursue immediate income, it is too far away and “unaffordable” to take out part of the money from the salary to pay social insurance, and most riders are not highly motivated to participate in social insurance.
According to the research of domestic scholars on the demand of riders, riders pay more attention to income, working hours and so on, and the demand for insurance is not strong, and there is even resistance. The reason is that a part of the social security fee needs to be deducted from the salary, which is undoubtedly a “loss” for riders who are looking for an immediate income.
For example, in March 2024, at a discussion organized by the Standing Committee of the Shanghai Municipal People’s Congress, a takeaway boy said: “I am from a rural area, and social security means little to me, and I am unwilling to pay!” Another takeaway brother revealed: “If I pay social security, I personally have to pay 700 yuan every month, and this 700 yuan is equivalent to 100 orders I want to deliver.”
Even if the takeaway platform has the intention to pay social security for the majority of riders, but the riders are unwilling and uncooperative, the social security payment plan can only be a castle in the air. Do you want the platform to forcibly “kidnap” riders to participate in insurance? Obviously unrealistic.
Problem 3: The number of riders is huge, and the platform will inevitably face huge capital cost pressure due to the large number of riders paying social insurance, and it is a challenge to make operational adjustments.
From the perspective of the planning of major platforms, JD.com has to bear all the social security costs for food delivery riders, and Meituan has to provide social security for millions of full-time and part-time riders.
This is obviously not a hasty release plan, and each platform needs to come up with a practical operation plan.
Co-ordination by relevant departments, not “rushing”
In addition, judging from the announcements issued by platforms such as Meituan and Ele.me, they all mentioned “the overall guidance of relevant departments such as the Ministry of Human Resources and Social Security”.
In fact, social security for food delivery riders is not a temporary idea of the employment platform, but a long-explored reform.
For example, in 2022, seven provinces and cities, including Beijing, Shanghai, Jiangsu, Guangdong, Hainan, Chongqing, and Sichuan, launched a pilot project on occupational injury protection for employees in the new business format, and Meituan was one of the first companies to participate. It is understood that as of the end of March 2024, Jiangsu Province alone has included a total of 1.78 million employees in new employment forms into the scope of occupational injury protection, of which Meituan riders account for a considerable proportion.
Ele.me also said that under the unified guidance of the human resources and social security department, it launched a pilot project of occupational injury protection for new employment forms in the first batch of 7 provinces and cities in the country, and paid premiums for riders in full and in full. Starting in February 2023, Ele.me will launch a pilot project in some cities as planned to pay social security for Ele.me Blue Knights.
In fact, providing social security for new employment groups such as food delivery riders is a new issue that needs to be solved urgently. Under the “trichotomy of labor relations” proposed in Circular No. 56, how to implement labor protection such as social insurance is “uncharted” even from a global perspective, and there is no experience to follow.
More importantly, the social security issue of food delivery riders involves many parties, in addition to the employment platform, but also involves the pilot provinces and cities, local departments of the insured party, etc., which is not one or two enterprises can decide, which requires the overall guidance and deployment of the Ministry of Human Resources and Social Security and other competent departments, so that this reform can be effectively promoted.
Further, giving social security to millions of food delivery riders is also related to more than 84 million new employment groups such as online car-hailing drivers and couriers. If a breakthrough can be made in the social security reform of food delivery riders, then the protection of workers’ rights and interests in other industries will also be a matter of course.
For example, Li Zhong, Vice Minister of the Ministry of Human Resources and Social Security, made it clear on February 22 that some migrant workers, flexible employment personnel, and new business practitioners are difficult to directly participate in the traditional unit-based social insurance system due to unclear labor relations, flexible working methods, and unstable income.
There is a clear signal in the policy, and encouraging enterprises to explore “improving the threshold and giving insurance subsidies” is the key to the next reform. From this point of view, it is not so important to compare who made the announcement first and discuss whether to “run ahead”. The most important thing is that in the next pilot reform of social security for food delivery riders, various measures must be implemented.
For example, Meng Quan, director of the Department of Labor Relations of the China Institute of Labor Relations, analyzed that young riders need work-related injury and medical insurance the most, while older riders value endowment insurance.
For another example, our current employee insurance system cannot meet the needs of new employment groups, and the social security program specifically for new employment forms has not yet been clearly defined. However, if in accordance with the policy direction, the payment base is appropriately lowered according to the average actual income of delivery workers, the mixed insurance types urgently needed by riders are redesigned, and the proportion of enterprises and individuals is reasonably apportioned, etc., so as to benefit more part-time riders and provide a more feasible way to solve the social security problem of 84 million new employment groups.
However, this is not a matter of one or two employment platforms, but a matter of policy, locality, enterprises, and academia, and the exploration of “trial first” to obtain a greatest common divisor.
