Bom Kim, the founding father of Coupang, South Korea’s reply to Amazon, is anticipating his firm to soar previous a $50bn valuation when it lists in New York this week.
However again in Seoul, far-off from the glitz of the preliminary public providing, the ecommerce firm, which is backed by the likes of SoftBank, Sequoia and BlackRock, is dealing with political strain and police inquiries over a collection of accidents and deaths amongst its staff.
In response to Korean politicians and the nation’s Public Service and Transport Employees’ union, eight Coupang staff have died over the previous 12 months on account of overwork.
This included two Coupang staff who died over the weekend, the union instructed the Monetary Instances.
In response to the demise on Saturday of a supply driver, the corporate mentioned: “The deceased labored round 4 days every week on common and labored about 40 hours for the previous 12 weeks”, including that his final day of labor was on February 24.
“The corporate will actively cooperate within the processes of figuring out the reason for demise, and can spare no efforts in offering all helps to alleviate the ache of the bereaved households,” the corporate added. “Coupang will additional endeavour to guard the well being and security of the employees much more completely.”
Coupang declined to touch upon the broader allegations.
The corporate has declined repeated requests from the FT for interviews over the previous two years.
Analysts mentioned that whereas the problems had been unlikely to dampen investor enthusiasm for this week’s IPO, they raised questions in regards to the sustainability of Coupang’s long-term progress.
“Traders will not be paying a lot consideration to Coupang’s labour points but, though there are definitely issues with the workload and labour depth and its ill-treatment of staff,” mentioned Yoo Seung-woo, an analyst at SK Securities.
In its IPO prospectus, Coupang warned that a few of its operations had been “topic to sure detailed and complicated honest commerce, labour, employment, and office security legal guidelines and laws, which proceed to evolve and have and can proceed to have an effect on our operations and monetary efficiency, might topic us to prices and penalties, and will have an effect on our popularity”.
Coupang touts its know-how
Kim, a 42-year-old Harvard dropout, began Coupang as a web site providing offers to group patrons. With aggressive advertising and marketing and low-cost offers, it turned vastly common and was the highest app in Google’s Korea Play retailer final 12 months.
In recent times, Kim has spent closely on constructing a logistics community of 100 fulfilment centres throughout 30 cities. Coupang now boasts that just about 100 per cent of its orders are delivered both the identical or the following day.
The corporate says this community is the way it outcompetes its fierce rivals, equivalent to Gmarket and Public sale, owned by Ebay, and conventional Korean retail giants together with Lotte and Shinsegae.
Korean labour activists have drawn some parallels between Coupang and Amazon, however say that Coupang’s operations are a lot much less automated than these of the Seattle ecommerce group, and far more reliant on handbook staff. They added that Coupang’s greatest innovation was utilizing knowledge and synthetic intelligence to search out methods to squeeze these staff.
Go Geon, a former employee on the firm’s warehouse in Bucheon, south-east of Seoul, tore his left hamstring whereas hurrying with a field in one of many firm’s warehouses, and was requested by his supervisor to not lodge a criticism. “Hamstring accidents usually occur to skilled athletes,” he mentioned, however added that such accidents “have grow to be like a part of the job”.
In response to warehouse staff, in the event that they fall behind hourly targets they face public shaming — and the targets are frequently rising. Particularly, staff mentioned there was an enormous drive for quicker work when Coupang launched same-day fresh-food supply in April 2020.
“The corporate’s obsession with effectivity is hurting staff’ well being. Its improvements are the outcomes of driving the employees to the acute,” mentioned Ryu Ho-Jung, a lawmaker for the progressive Justice Get together. “If this case continues, we are going to see extra staff die.”
South Korea’s Labour ministry carried out a three-month investigation into Coupang’s logistics community final September and mentioned it had discovered staff wanted extra breaks and extra security training. It known as for medical check-ups for night-time employees.
“We’re watching the corporate’s labour surroundings with concern,” mentioned a ministry official, including that the ministry had met Coupang’s executives final month and requested them to treatment the issues.
Firms exploit loopholes
South Korea has robust labour legal guidelines for full-time staff, together with a most 52-hour work week, obligatory one-hour breaks throughout an eight-hour shift, and necessary medical insurance coverage for work-related accidents.
However the legal guidelines don’t apply to momentary staff with out contracts, and unions say there are various loopholes. Korean courts have tended to facet with firms over staff, though staff at Samsung who contracted most cancers whereas making chips have just lately gained a landmark case.
Seventeen couriers at different Korean supply firms, who typically work as much as 90 hours every week on fee, have died of overwork in South Korea for the reason that starting of final 12 months, based on the supply staff union. Coupang’s supply drivers are full-time staff, and the corporate mentioned it abided by the 52-hour restrict.
However at its warehouses, 90 per cent of staff are day labourers or on short-term contracts, the next share than at its rivals, based on labour researcher Jang Kwi-yeon.
“One of many greatest complaints we hear persistently from warehouse staff is that their workload at Coupang is far heavier than its ecommerce rivals,” she mentioned.
Coupang mentioned it elevated its warehouse workforce by 78 per cent and invested greater than Won500bn final 12 months in automating its amenities to be able to scale back workload. Nonetheless, the speed of accidents amongst its staff has grown as quick as its gross sales, near-tripling to 982 between 2018 and final 12 months, based on the state-run Korea Employees’ Compensation & Welfare Service.
In October, Jang Dug-joon, a 27-year-old employee at Coupang’s fulfilment centre in Daegu, was discovered useless within the bathtub in his residence shortly after ending his night time shift.
The case sparked nationwide outcry over employee therapy within the ecommerce sector, which boomed throughout the coronavirus pandemic. In response to a authorities investigation, Jang had labored for greater than 62 hours throughout the week earlier than his demise.
Coupang initially denied Jang died due to his work however later apologised for his demise after an official verdict that he died of overwork. Coupang promised to offer assist for his bereaved household, but it surely declined to touch upon whether or not any compensation had been made.
In January, Choi Kyung-ae died of a coronary heart assault on her sixth day working at Coupang, after a nine-hour shift in an unheated warehouse, based on the union and her household.
“It was -14C that night time. And she or he needed to work within the chilly warehouse, counting on only a hand hotter,” says Kim Chul-soo, Choi’s brother-in-law. “However the firm is denying any accountability and refusing to fulfill to debate the problem.” Coupang declined to touch upon the case.
Final month Joe Nortman, the pinnacle of Coupang’s logistics operations, was summoned to a parliamentary listening to on labour situations. He apologised for the demise of Jang and different staff and vowed to enhance the corporate’s labour surroundings.
“I deeply remorse all these conditions. I feel it’s a tragedy each time there may be any fatality, whether or not it’s work-related or not. And I really feel we’re going to proceed to do our greatest to enhance . . . I feel the outcomes must get higher. And we’re dedicated to creating that occur,” mentioned Nortman, who labored for firms like JCPenny, Amazon and UPS earlier than becoming a member of Coupang.
Kim, Coupang’s founder, boasts of being the primary job creator within the personal sector, including 25,000 new jobs final 12 months. However unions and labour activists say Coupang’s day staff or momentary staff endure from an absence of job safety and due to this fact are unable to voice their opinion collectively in opposition to the corporate’s labour practices and dealing situations.
In response to the union of Coupang drivers, common particular person supply masses elevated to 340 a day by February 2020 from simply 57 packages in 2015 however union members say their wages have stagnated. And greater than 90 per cent of Coupang drivers give up inside a 12 months due to extreme bodily work, the union mentioned. Coupang declined to touch upon the union’s declare.
A supply driver working in Seoul’s northern outskirts, who requested to not be named, mentioned he had no time to eat throughout night time shifts that contain delivering packages to about 150 areas.
“It isn’t shocking in any respect in case your colleague doesn’t present up the following day. You simply assume he give up, as a result of the workload is so insufferable. I’m not positive how lengthy I can stand up to this,” he added.
Coupang has promised $90m of inventory choices to its frontline staff and non-manager staff, based on the IPO prospectus. However some staff mentioned they had been unlikely to have the ability to stay for the 2 years wanted to totally train the suitable.
“I’m afraid that I could die if I work like this day-after-day,” mentioned a 53-year-old employee with the surname Kim at Coupang’s Deokpyeong warehouse.
— to www.ft.com