To Better Respond to Risks Related to Labor Regulations
Coupang has recently joined the Korea Employers Federation (KEF), which mainly handles labor-management relations issues. This is to better respond to risks related to labor regulations with tragic accidents related to its delivery workers following one after another.
According to industry sources, Coupang is taking regulation risks very seriously to the point of joining the KEF voluntarily. Each KEF member has the advantage that it can handle its relations with the government and the National Assembly, which are burdensome for individual enterprises, under the umbrella of the federation.
A total of seven Coupang employees died for the past one year and the company is currently under criticism for demanding overwork. Workers are calling for the government to tighten its monitoring of the company while it is claiming that the workloads of the dead workers did not exceed the industry average.
This controversy may turn into regulations to hinder Coupang’s fast delivery, which has attracted and satisfied a large number of customers. Early this year, the ruling Democratic Party of Korea tabled a bill to regulate dawn delivery, only to backfire. More recently, the Financial Times reported that Coupang is under political pressure in the wake of the deaths and the long-term growth potentials of the company are in question. As of the end of September 2020, 43,171 people were working for Coupang, and it was the third-largest South Korean company in terms of employment behind Samsung Electronics (104,723) and Hyundai Motor Company (68,242).
Those in the industry point out that Coupang’s KEF membership has to do with strengthening enterprise regulations as well. In going public in New York lately, Coupang mentioned the Serious Accidents Punishment Act and the Online Platform Act as its potential business risks. The former is to criminally punish the management in the event of an industrial accident. The latter is for a platform company to share responsibility in the event of a fault of its partner store. Coupang said to investors that it may fail to concentrate capabilities on its key business once the laws become effective.
An increasing number of South Korean IT companies are joining the KEF these days as labor regulations have increased under the current administration. One of the typical examples is Netmarble, which signed up in 2017. The company was criticized with regard to overwork and overdue wages, and then it announced an improvement plan and paid extra wages. It asked for the KEF’s help during the course and joined it later.