[ANALYSIS] Labor market uncertainties cause gig economy to grow

Pandemic shifts landscape of job market

By Anna J. Park

The global pandemic over the last two years resulted in a major shift in Korea's labor market with the so-called "gig economy" and "gig workers" becoming increasingly visible.

A gig economy is typified by a prevalence of short-term contracts or freelance work instead of permanent jobs. Gig workers, or independent contractors, offer their services on demand instead of being fettered by the hierarchies of traditional companies. This labor market trend is well aligned with a strengthened individualistic tendency among the country's young generation, as well as the desire for a flexible work environment amid pandemic-led economic shifts.

While many of these independent contractors work in delivery services, the on-demand workforce in other sectors such as design, marketing, writing and consulting are now engaged more than ever in this style of operation.

Both workers and companies seem to be in a win-win situation, as employees seek more independence and flexibility in their work environment, while companies also hope to retain a shorter period of work contracts with employees in order to swiftly respond to market changes especially during the pandemic.

This trend is not limited to Korea's job market.

According to the International Labor Organization (ILO) early this year, the general number of web platform-based gig workers tripled during the past decade, while the number of delivery-related gig workers increased by more than 10 times.

Exponential growth of gig labor market

The number has exponentially increased here during the past few years. According to data released by the Ministry of Employment and Labor and Korea Employment Information Service in October, about 8.5 percent of the entire workforce in Korea now work as a provider of some type of service for clients through online platforms.

About a third of them, or 29.9 percent, were working in the category of delivery, shipment and driving. Expertise-based services like translation, consulting or design, also accounted for nearly 10 percent of the flexible workforce. Simple admin work accounted for about 14 percent of all gig-type labor.

In particular, delivery-related gig workers are a major part of the whole on-demand workforce, as the local quick commerce market ― meaning delivery within one hour after placing an order ― has increased by some five times to 7.6 trillion won ($6.3 billion) in 2020 up from 1.5 trillion won in 2015.

The number of people who voluntarily register themselves, without the engagement of any job agency, as delivery agents for Baemin Connect of delivery platform service Baemin, has increased by more than five times during the past two years, from around 10,000 in 2019 to 50,000 in late 2021.

Similarly, the number of people who registered themselves for Coupang Flex, the e-commerce company's delivery system where anyone over 18 years of age can work, also increased sharply during the pandemic.

On average, full-time Baemin delivery agents earned about 48 million won last year, while the top 10 percent made 75 million won. While many gig workers opt for full-time delivery jobs, some do on a temporary or part-time basis to increase their monthly income.

A 22-year old female gig worker, who did not wish to reveal her name, is one such delivery agent. She has been a delivering food for more than six months now to save money for her school tuition and living expenses.

"While I was searching for a part-time job to earn money for my university tuition, I found out that delivery agents are earning a stable and high income, while giving me the freedom to make my own schedule," she explained. She said there wasn't a high entry barrier to the job as a female worker or any gender discrimination in her work.

Another delivery agent in his late 20s does part-time gig work after he finishes his regular, full-time job at a small company. Once his work day finishes at around 5:30 p.m., he delivers food using his electric bike until late into the night.

"I like the fact that I could see the income is directly linked to how much work I did. While I would spend my free time riding my bike, I could also increase my monthly income," he said.

Food delivery agents ride motorcycles on streets in Seoul. Yonhap

Dark side of increasing gig economy

The gig economy offers advantages, such as allowing a flexible schedule for workers and lowering the bar for entry into the local labor market. But it also lacks job security and employment benefits.

The definition of independent contractor becomes blurred as platforms pay workers a fixed rate and offer little to no benefits. So while on-demand workers can be their own boss and generate an income, any apparent financial rewards reach a limit.

Workplace health is another problem. Since gig workers earn income in direct proportion to their input, some people tend to overwork, grinding down their physical and mental capabilities that will affect their quality of life and health in the long-run.

Delivery agents are also exposed to the constant risk of traffic and other accidents. And when accidents happen, agents are likely to be caught in a blind spot when it comes to legal protection. Platform-based workers effectively take on the burden of risk from the platform operators who would be responsible in the same situations under different employment conditions.

Such issues have already been witnessed in other countries with some platform business operators being required to take on increased legal responsibilities for the benefit and protection of contractors who generate the companies' profits.

In the face of such a complex web of questions, experts are calling for a comprehensive approach to address the issues gig workers face.

"A comprehensive approach, covering a wide variety of social policies, is necessary, as the changes from the traditional model of labor to gig labor are forecast to impart a great impact to various domains of social policies, ranging from labor law, the role of social insurance and public assistance," Chang Ji-yeon, a researcher at Korea Labor Institute, pointed out.