China Hit by Layoffs, Millions of Office Workers Downgrade to Become Couriers

The gig economy has now become the main buffer for China’s labour market amidst a wave of layoffs hitting various sectors. However, the rising number of flexible workers with uncertain incomes is also suppressing domestic consumption. Meanwhile, low participation in social security programmes increases future welfare risks, and an increasingly saturated market continues to depress the earnings of online transport drivers and food delivery couriers. More than 84 million Chinese citizens are estimated to be working in the gig economy sector in 2025. This number continues to grow amid a slowdown in the formal labour market and has become one of the main pillars of the country’s digital economy. At the same time, youth unemployment remains a challenge, and millions of new graduates each year must compete for permanent jobs. For platform companies, this growth indicates significant digital economy opportunities. But for many workers, becoming a ride-hailing driver, food courier, or freelancer is no longer a career choice, but rather the only option left. Analysts assess that the gig economy has become a vital safety net for China’s labour market amid a property crisis that has wiped out many construction sector jobs, while the manufacturing industry continues to cut labour due to automation, cost efficiency, trade tariffs, production overcapacity, and price wars. The sector is now also increasingly absorbing university graduates and office workers affected by weak domestic demand and the adoption of artificial intelligence. “The proportion is very large. This phenomenon is no longer limited to rural migrant workers but has spread to the middle class and university graduates,” said Yang Zhan, a cultural anthropology expert from Hong Kong Polytechnic University. According to him, the transformation of China’s manufacturing industry is causing many labour-intensive sectors to be abandoned. On the other hand, the development of AI is further narrowing job opportunities. The surge in gig workers does not only reflect the growth of digital services. Behind it, China’s job market is also changing. The China New Employment Forms Research Center estimates the number of flexible workers—those who must work without full-time employment contracts—will reach 320 million by 2026, up from around 280 million in 2025. This means nearly 44% of China’s workforce now works without full-time contracts. The sheer size of this figure shows that the platform economy is increasingly acting as an absorber of labour when other sectors weaken. Analysts assess this condition is triggered by a combination of factors, including the prolonged crisis in the property sector cutting construction jobs, automation and efficiency in manufacturing, weak domestic demand, and the expanding use of artificial intelligence in some white-collar jobs. In other words, the gig economy is growing not solely because demand for digital services is increasing. The supply of labour losing formal employment is also continuously rising. The story of Bao Zhang illustrates this shift. The 30-year-old lost his job as a software tester earlier this year. He now drives a car for a ride-hailing app in Beijing from 7 a.m. until nearly midnight to earn about 6,000 yuan per month after deducting vehicle rental and charging costs. “People who used to take taxis now have to drive taxis themselves,” he said. Stories like Bao’s are no longer the exception. More and more university graduates and former office workers are entering the platform economy because opportunities to return to formal employment are increasingly narrow. Behind the flexibility offered, work in the platform economy also carries significant consequences. Many gig workers do not enjoy the protections typically received by formal workers, from pension guarantees to health insurance. Because most work without permanent contracts, participation in the social security system remains low. A Chinese government report in December 2025 showed that by the end of 2024, only about 70.6 million flexible workers were recorded as participating in the urban workers’ pension scheme, even though the total number of flexible workers had already reached hundreds of millions. A Peking University survey of around 30,000 food couriers also found that less than 10% of respondents supported mandatory social security contributions. For workers, these contributions are considered quite burdensome as they can cut about 10% of income, while companies must bear additional costs of about a quarter of the worker’s salary. The income of 16 million food couriers rose by an average of 11% in 2025, but the wages of 37.2 million online transport drivers actually fell by 1.8%. The most common problems in the platform economy include unstable income, limited social protection, long working hours, and earnings that are highly dependent on the number of orders. The government’s burden to cover the social security deficit continues to swell. According to Gavekal Dragonomics, central government transfers have nearly tripled in a decade to about CNY 3 trillion, or roughly 10% of total state expenditure. However, the government considers imposing additional contributions on gig workers not a solution because the majority are low-income migrant workers. Several cities, including Shenzhen, have even warned that the online transport service market is already saturated. The government thus faces a dilemma between strengthening worker protections and maintaining the platform economy sector’s ability to absorb labour.