Aping Amazon, Korea’s Coupang has a labor problem

SEOUL – Online delivery service giant Coupang is often likened to the “Amazon of South Korea”, but amid the good vibes and the billions raised in a March initial public offering (IPO) in the US, the firm faces potentially damaging labor abuse allegations from the sorting floor to the C-suite.

Even in a country known for generating hits – from Olympic combat sport taekwondo to industrial monsters Samsung and Hyundai, to tech players Naver and Kakao and cultural behemoths like boy band BTS and film director Bong Joon-ho – Coupang is noteworthy.

Coupang listed on the New York Stock Exchange in March, hitting a market capitalization of US$84.5 billion in his trading debut in the biggest IPO so far this year. It has since started an expansion beyond South Korea into Singapore, where the conditions that have led to its growth at home could feasibly be replicated.

Like the early Korean conglomerates that surged under the leadership of charismatic, entrepreneurial leaders, Coupang has shot to prominence under founder Kim Bom-suk. “He is very talented, very smart and a very good salesman,” said a former foreign executive of the company.

Though Kim grew up in Korea, he was educated at a prep school in the US and subsequently studied at Harvard University, from where he dropped out before graduating. After kickstarting a number of ventures, Kim founded Coupang in 2010. 

First scouted by gold-fingered investor Masatoshi Son of SoftBank, who poured in $2 billion, the company drew further capital from US investors, turning Kim into a billionaire and making Coupang into Korea’s most talked about “unicorn.”

It pioneered so-called “rocket delivery” services that quickly shot past competitors and also pioneered some issues in the human resources field.

“What I understood was that Bom [Kim] wanted to disrupt – and he wanted to disrupt in a managerial way,” the executive said. “In Korea, there is a culture of addressing colleagues by title, not by name, but in Coupang it was first names.”

Online delivery service providers were perfectly placed to profit from 2020’s Covid-19 pandemic. As Koreans stayed home and ordered out, Coupang saw revenues go through the roof.

That’s the good news. But there are still questions about whether the company can make the leap from revenue surges to actual profitability, a question that is more likely to concern investors in New York than citizens in Seoul.

At home, on newspaper pages and in online chat rooms, the bad news is starker: Coupang is earning a reputation for burning through its workforce.  

Labor airs its woes

The high-intensity work practices of on-demand delivery services like Amazon have drawn widespread criticism. These complaints are even louder in South Korea, where the concept of “death by overwork” is no joke.

A group of labor activists raised their Coupang complaints to foreign correspondents in Seoul last month.

Kwon Young-gook, a lawyer who represents the Committee for Coupang Workers’ Human Rights and Health, alleged that nine Coupang employees – seven workers and two sub-contractors – have literally been worked to death.

“They died because of cardiovascular diseases and heart attacks,” Kwon said. “Their causes of death have a common theme.”

“By reviewing the reality, we can identify that behind [Coupang’s] growth is the sacrifice of their laborers,” added Yun Chang-hyeon, chairperson of the National Union of Media Workers.

Even so, Kwon conceded that legally proving overwork is a cause of death is problematic.

“You can refer to death from overwork, but asking for responsibility from executives is not easy in the legal system,” he admitted. “You have to identify all the causal relationships and where [companies] evaded responsibilities.”

According to “Ms. Jang”, the mother of a deceased, night-shift Coupang worker, the biggest penalty that could be levied in her son’s case was a 100,000 won fine for the company, with no punishment for related executives.

According to Kwon, the company employs both daily workers and contract workers. Daily workers renew their employment literally on a daily basis, while contracts are offered for three-, nine- or 12-months of work.

Those who work more than two years are eligible for permanent employment. According to Kwon’s findings, over 65% of workers are daily workers, 25% are on contracts and just 10% are long-term workers.

“The employment structure there does not guarantee employment,” he said.  “It is very unstable, this is very obvious.”

It is a situation that forces workers into furiously competitive circumstances.

“The renewal of a contract at the Coupang logistics center is like a miracle,” added Choi Jeong-ah, of the Korean Public Transport and Workers Union.

The company splits its day into three shifts, but, Kwon alleged, most workers end up doing one to two hours of overtime every day. Moreover, the “routinization of night labor destroys biorhythms,” Kwon alleged. 

One of Coupang’s core competencies demands night shifts: rocket delivery, under which orders placed before midnight are guaranteed delivery by 9:00 am the following day. 

“Based on the history of labor, it has moved in the direction of abolishing long or nighttime work for the health of laborers,” Kwon said. “But Coupang’s fast delivery is heading in the wrong direction.”

He also claimed that managerial monitoring of the workforce is so harsh that workers “can’t even break for a second,” and require permission even to visit the toilet.

Moreover, Coupang’s logistic centers have neither heating nor cooling systems in place, Kwon claimed – a serious issue in South Korea, which suffers harsh extremes of temperature.  

Other speakers at the foreign correspondent event explained that soda cans had exploded in summer, while detergent had frozen in winter, and that the pile-up of products in football-field-sized logistics centers create hellish working conditions.

“Management that is running a company at the expense of people’s lives is not sustainable,” Kwon said.

“We have to prevent the spread of the Coupang structure to other logistics centers,” said unionist Choi.

Coupang returns fire

Coupang, however, refutes many of the labor abuse allegations.

“We employ additional safety measures such as completely turning off workers’ PDAs during all breaks and when they’ve reached the 52-hour workweek limit to ensure that workers get adequate rest,” a Coupang spokesperson told Asia Times.  

It has ditched the widely criticized Unit Per Hour (UPH) metric for worker monitoring that is widely used across the logistics industry. Moreover, in 2020, Coupang added some 12,500 new jobs in its logistics centers and made investments of 500 billion won ($442 million) in order to ease the workload. 

As for working conditions, Coupang has made improvements to its physical working environments, the spokesperson said. Mobile aircons, heaters and circulators have been added to the logistics centers.

“The fact that Coupang is the only one that installed fans in warehouses was confirmed in the National Assembly hearing by the Environmental and Labor Committee held on February 22,” she said.

Kwon also called Coupang on its aggressive public relations strategy: Rather than suing actual media, the company has taken out lawsuits against individual reporters. This is “malicious behavior” that “puts a gag on journalists,” he said.

Coupang, however, begged to differ.

“We took action in just two egregious cases, one in 2020 and one in 2021,” the spokesperson said.

One case involved a reporter who alleged that the company had murdered one of its workers. The other, Coupang said, harassed employees and included multiple falsehoods in his reports, but had refused to make corrections.

Shifting labor conditions

It could be argued that Coupang’s management is leveraging common practices in the Korean market.

As part of a package of highly successful IMF-mandated reforms instituted in the wake of the 1997-98 Asian financial meltdown, South Korea made significant changes to its labor laws. A country which had been wracked for a decade by worker strife overseen by powerful unions radically reshaped its workforce to add flexibility to labor practices.

That came at a cost, however. Contract and part-time workers became the new norm.

Those reforms piled extra stress on human resources that had long labored under aggressive management. Operating within an eco-system that combines a palli-palli (‘hurry, hurry”) culture with a powerful social emphasis on diligence and some of the longest working hours in the OECD, Korean labor is highly stressed.

In the past, female workers in the country’s notorious textile sweatshops and metal-bashing economic warriors in heavy industry were the biggest victims. Currently, social and media focus is on the country’s online delivery service workers – and that is a problem that extends beyond Coupang.

“Last year we had 16 deaths of delivery guys,” said lawyer Kwon. “There is a high level of labor intensity so it became a serious social issue in Korean society.”

But while overwork may be a social issue, unions are not the force they were in the late 1980s and 1990s: The total unionization rate across the Korean workforce is currently approximately 10-11%. 

“We have to make Coupang behave as a corporate leader, as a rising star in the logistics sector,” said Choi Jun-shik, a Korea representative of the umbrella union UNI Global Union. 

But while CJ, another major retailer, and Korean Post are unionized, Coupang is more an American than a Korean-style company, she opined – citing Coupang’s US listing, its founder’s formative experiences and its backing from US investors.

“I think they will follow typical American anti-union policies,” she said.  “They have mobilized lots of investments from funds, so they don’t mind if their working conditions are bad.”

“Humans are not machines,” Choi said. “Companies that treat humans like parts of a machine cannot be tolerated…this is why we need labor unions.”

Though Kwon argued furiously for the creation of a labor union inside Coupang – and umbrella union representatives are lobbying online for this, while also leafletting outside the company’s facilities – the idea has not taken off.

When it comes to lack of a union, Coupang is hardly unique in Korea: national flagship Samsung is not unionized. Nor it is unique in online delivery services, given that the gold-standard company in the space is not unionized.

“As you can see from the case of Amazon, they were defeated by capital,” Kwon lamented.

Even so, the company does have a labor safety valve: Its labor-management committee, called COUTALK, organized by the company’s HR team.

“They are kind of organizing discussions in the delivery organization in Coupang,’ said the foreign executive. “This is helping Coupang to keep unrest at bay in the company.”

It is not just box-lifting workers who have felt the heat. As Coupang sourced foreign talent with experience in companies like Walmart and Amazon, it has burned through a long list of imported foreign executives, Asia Times has learned from both a Seoul-based labor lawyer and a human resources executive.

“The management team around [founder Kim Bom-suk] is pretty new,” said the foreign executive who spoke to Asia Times on condition of anonymity. “There used to be different people around him, but it is really difficult to work with him for more than two years.”

The source aired a laundry list of complaints against the company’s founder.

“When you entered Bom’s office, you didn’t know how long things would last,” he said. “Each time we had meetings, we got into his office, and it could last something like 2-3 hours and he was constantly speaking.”

During a managerial discussion on compensation for drivers (“Coupang Men”) –  where the issue was to pay more than the competition, but keep their rates competitive – a mid-level manager was invited in to deliver a presentation on the complexities of the situation. After his presentation, Kim thanked him and the executive left.

“But just after the man had left the room, he started shouting at the HR manager saying, “I told you that around this table I only want the top guys!’” the executive recalled. “Don’t waste my time on low-level guys!”

Decision-making was centered almost entirely around Kim, who, though an excellent presenter in external meetings, would frequently “lose control” – shouting and threatening to fire people – in internal meetings, the ex-Coupang executive claimed.

Old school leader

The picture that emerges is that of the old-school, hard-driving Korean corporate leader.

Perhaps the nation’s most iconic zero-to-hero business leader was Chung Ju-yung, the late founder of Hyundai. Chung was notorious for his florid managerial style – yelling, thumping tables, and hurling ashtrays.

However, Chung was far from unique in this. Korea’s social hierarchical culture, combined with elements of militarism in the male labor force that are a hangover from the national conscription that all men undergo, may underwrite these kinds of managerial practices.

“Among younger Koreans, there is a generational shift, a mentality shift, especially among startups,” Daniel Tudor, author of Korea: The Impossible Country told Asia Times.  “But I think historically, Koreans have kind of lionized this idea of the one central figure in a business.”

The foreign executive conceded that Kim’s leadership style was particularly difficult for foreign staff; Koreans were more culturally conditioned to it.

“Koreans could stand it better than the international guys,” he said. “Oh boy! I have a bunch of examples where they could not stand it.”

Acceptance of this work culture adds a pressure-cooker element of stress to Korean working life.

“The pressure in South Korea is much higher than in Europe, for example,” he continued. “Lots of people in Coupang are under maximum pressure, it is cultural – and it is not only Coupang, other companies use it.”

Yet, Tudor mused, the driven, hard-driving, entrepreneurial executive is by no means unique to Korea.

“Look at Steve Jobs,” he said. “He is the most successful businessperson of our era, and he was one of those characters.”