JD.com Considers Cutting Expenses on Worker Insurance and Salaries

JD.com rose nearly 1 percent to $29.91 per share today after it announced make a change on delivery staff's insurances and salaries.

Binwei Wang
    Apr 19, 2019 2:52 PM  PT
JD.com Considers Cutting Expenses on Worker Insurance and Salaries
author: Binwei Wang   

China's e-commerce giant, JD.com Inc. (Nasdaq: JD) announced it has made a decision after considering making changes to its employee benefits, specifically, cutting the delivery staff's insurance and housing funds, as well as adjusting basic salaries.

The founder and chairman of JD.com, Richard Liu, said in an internal email this week that in 2018, the funds the company used to pay for insurance and housing for delivery staff exceeded those paid by five private Chinese express delivery companies. On average, he said, the salary paid to a JD delivery worker is three to six times larger than private logistics companies normally pay.

He added that JD Logistics lost more than $343 million in 2018, not including the internal settlement surplus. Which means that if the internal settlement is deducted, its loss would reach $420 million. The main reason, Liu said, is that the external quantity is small and the internal cost is high.

Under this situation, JD has two choices, the chairman continued. Either to increase the number of orders to increase income or lower the internal costs of the employee benefits to those of other logistics companies. He proceeded to announce that JD has selected to lower the housing funds, but did not cancel the insurance.

Liu also mentioned that the basic salary is just 10 percent of the total pay a delivery worker gets. The purpose of the cancellation on the basic salary is to encourage workers to earn more commission.