[The Editors' Verdict] How to Enhance the Competitiveness of the 'Gig Economy'

Kim Kyung-soo, Professor Emeritus at Sungkyunkwan University

The gig economy (an economic form based on short-term contracts) is a sector of the economy where employment occurs on an as-needed basis. It differs from the traditional hierarchical structure of organizations like companies, where workers have a certain legal status. The forms vary widely, from substitute drivers and food delivery to computer coding and journalistic contributions, as well as part-time faculty positions at universities that meet educational demand affordably. The gig economy represents a mutual understanding where employers have independent contracts free from legal obligations, and workers enjoy flexible working conditions. In advanced countries, it is estimated that gig work could account for up to one-third of future employment.

The advancement of digital technology has brought two major impacts to the gig economy. First, the emergence of tech platforms enabled by digital networks, such as smartphone apps, has been a catalyst for the massive quantitative growth of the gig economy. In particular, the COVID-19 pandemic forced consumers confined at home to purchase various daily necessities and food through online contactless (untact) means, while job seekers entered platform labor, causing the gig economy to expand rapidly. At the end of last year, the Korea Labor Institute estimated that platform workers accounted for about 7.5% of employed persons aged 15 to 64, approximately 1.79 million people, with 220,000 employed through business models like delivery apps.

As digital technology reduced traditional jobs, gig economy labor, including platform labor classified as special-type workers (teukso hyeongtae geullo jongsaja, or teukgo laborers), exploded. These workers, not protected by labor laws, fall into the category of the precariat?a newly coined term referring to an unstable working class suffering from low wages and low skills. This represents a new form of labor in the 21st century.

The Korea Labor Institute and the Ministry of Employment and Labor announced at the end of 2018 that there were over 2.2 million special-type workers. According to the government's nationwide employment insurance roadmap, all types of workers are expected to receive employment insurance benefits by 2025.

The logistics industry, encompassing supply chain management and distribution, is likely to have the highest concentration of special-type or platform workers due to its labor-intensive nature. Currently, the logistics industry is not separately classified but is mainly included under "transportation and warehousing," making it difficult to obtain precise statistics.

According to the Korea Integrated Logistics Association, the domestic courier market grew annually by about 10% over the past decade, but due to the COVID-19 crisis last year, online shopping surged explosively, resulting in nearly 20% growth (7.5 trillion won). However, the average unit price dropped to its lowest point (2,506 won in 2012 to 2,221 won in 2020). This explains the frequent overwork-related deaths among courier workers and clearly indicates that excessive competition is a contributing factor.

Last month, a logistics company successfully listed on the New York Stock Exchange, becoming a major topic. Recently, the Financial Times (FT) announced the top 500 high-growth companies in the Asia-Pacific region (excluding China), where South Korea ranked 6th, far behind Singapore (4th, with 74 companies). Among the top companies, a familiar food delivery company and a logistics-related technology company were included. This fact implies that despite excessive competition, the logistics industry has very high growth potential. There is room for social and economic policies to mutually reinforce each other. To advance the logistics industry, it is essential to establish and implement guidelines that significantly strengthen safety standards for the labor involved. When companies with sufficient capital and technological capabilities lead the industry beyond high safety standards, labor protection and competitiveness can both be enhanced.

Kyungsoo Kim, Professor Emeritus, Sungkyunkwan University