Shanghai's oversaturated ride-sharing market squeezes drivers

Zhan takes home 300-400 yuan (US$41-$55) a day ferrying passengers from early morning to late at night.

“Business hasn’t been that good (over the past two years), probably because of the pandemic. In the past, I could make money if I worked for eight, nine or 10 hours. But now I’m working 14, 15, 16 hours (for the same amount of money)," said 36-year-old Zhan, while searching for a fresh new customer on Didi, the Chinese equivalent of Uber.

China's weak post-pandemic recovery and record youth unemployment are sending more people into the ride-hailing sector, flooding the market and eroding the incomes of many of the 5.8 million drivers registered for such apps.

For Li Weimin, another full-time ride-hailing driver, his rationale for working underscores the shrinking job market. Li, who rents the car he drives for work, said he usually skips meals during the day, primarily to avoid parking tickets, since parking is often inconvenient across the city and tickets can cost up to half his daily earnings.

“It’s difficult to find other jobs now. There is no other job to find,” said 45-year-old Li.

On Tuesday (August 15), a raft of data highlighted how the world's second-largest economy had slowed further in July, putting pressure on already faltering growth. 

About 400,000 people began driving for ride-hailing firms in China between the end of April and the end of July, state media said, citing Ministry of Transport data. Analysts see this more than 7% increase in the number of drivers as a manifestation of the subdued job market. The average income for employees in Shanghai is around 525 yuan ($72.17) a day, data from the city government shows, in line with what most drivers make working much longer hours than an office worker. 

"Because of the impact of three years of the pandemic, many companies and small enterprises may have gone bankrupt or gone out of business, so a lot of idle labour will enter the market. There has also been a sharp decline in the number of jobs. In fact, from the perspective of ride-hailing (jobs) itself, it has some advantages. First of all, it has a higher degree of freedom than other jobs),” said Wang Ke, an automotive and travel industry analyst at Analysys, a market research firm.

"Compared to a job where you need to clock in at work, you can pick up customers or just stop working for them whenever you want to stop... Second, online ride-hailing has a relatively low threshold for entry. That is, the experience and education requirements are comparatively lower," Wang added.

China has more than 300 ride-hailing apps, which accounted for more than 40% of total taxi trips last year, state media reported. But cities including Shanghai, Sanya and Changsha have suspended issuing new ride-hailing permits. At least four others have issued warnings of overcapacity, with some saying drivers get fewer than 10 orders a day as a result.

But even with fewer drivers, making a living in China is likely to become more difficult as China enters an era of much slower economic growth, economists say. More than 21% of Chinese youth were unemployed as of June. China's statistics bureau said on Tuesday it will stop releasing jobless youth data, drawing public ire.

Reuters