China to set rules to protect drivers' rights in ride-hailing Industry

China defined new rules on Tuesday to protect the rights of drivers in its giant ride-hailing industry, requiring operators of the services to provide them with social insurance and make their earnings public.

As such, the rules came after Chinese regulators told companies including Didi Global, Meituan, Alibaba Group’s Ele.me and Tencent Holdings, in September, to improve their income distributions and guarantee rest periods for drivers and food-delivery riders.

Also, China’s state media has also criticized Didi, the country’s dominant ride-hailing platform, for not paying drivers fairly.

The new rules come as President Xi Jinping called for China to achieve “common prosperity,” seeking to narrow a wide wealth gap that threatens the country’s economic incline and the legitimacy of Communist Party’s rule. Also, the rules could increase costs for ride-hailers and impact their earnings.

In addition, the industry in China hit an overall transaction volume of $39.22 billion in 2020, according to a report by the Internet Society of China.

To be more specific, the transport ministry said that ride-hailing companies should improve income distribution mechanisms. “Anti-monopoly measures will be stepped up against such companies and a ‘disorderly expansion of capital’ will be prevented in the sector,” it added.

However, regulators in China criticized the biggest technology firms regarding their policies that exploit workers and violate consumer rights, as part of a campaign to exercise more control over large swathes of the economy after years of runaway growth.

The Chinese regulator imposed, in August, a limit on the percentage the delivery platforms take from drivers’ fee, according to a transport ministry official.