Only a few years ago, the only people who did gigs for money were musicians and entertainers. Now, industries ranging from dentistry to farming to childcare have resorted to an on-demand, contract basis of employment gigs. This has led to a contract-based gig economy, and reportedly more than 40 percent of American workers will be independent contractors by 2020. Gig economy is quickly shaping up to be the future, but Korea should not embrace it before it solves its existing problems.
Gig economy may not be a harmful concept. In its infancy, however, gig economy carries the possibility to turn into something exploitative without proper regulation. While it remains to be seen for much of the world, there seems to be a fine line between benefit and maliciousness in countries where gig economy has begun to take root. Given Korea’s track record on labor, however, gig economy may overshoot that line into the realm of harm.
The primary benefit the economy offers its workers is freedom. Workers can choose when and where they will work and may even choose not to, based on their discretion. This is due to their classification as independent contractors, in turn ridding workers of employee benefits. Independent contractors are seldom guaranteed sick paid leave, pensions, or maximum working hours. However, these problems already exist in Korea regardless of gig economy.
Due to the 1997 Asian financial crisis, temporary employment rates had shot up in Korea. In 2004, more than 37.0 percent of all workers were temporarily employed. In 2013, the figure had subsided to 22.4 percent, although the statistic is double that of the Organisation for Economic Co-operation and Development’s (OECD) average of 11.8 percent. In addition, only 22.4 percent of temporary workers are employed full-time within three years, compared to OECD’s average of 53.8 percent.
Another problem that plagues Korea is its unemployment rate with people aged 15 to 29. According to the Korea National Statistics Office, unemployment between people in their 20s reached an all time high of 12.5 percent in February 2016. This leads to an overabundance of the employment line, which inevitably gifts companies the carte blanche to exercise practices such as temporary employment with only one-fifth of the workers becoming full-time employees.
In 2014, Fast Company reporter Sarah Kessler spent a month working in the gig economy and remarked in her article that what she found was “hard work, low pay, and a system that puts workers at a disadvantage.” Kessler writes that “the universe of gig economy startups is mostly relying on young people and others who are underemployed.” In this regard, Korea is a mouthwatering prospect for these startups.
Recode writer Paris Marx claims that “though [the gig economy] doesn’t abhor inequality, its business model is well suited to take advantage of the growing divide.” In fact, OECD’s 2014 wage report demonstrated exactly that— a growing wage gap. Top-10 percent workers earned 4.8 times more in wages than the bottom-10 percent. Only two countries among the 34 OECD nations—the United States (U.S.) and Israel—showed wider wage gaps.
South Korea simply is not ready for the gig economy. Labor laws all across the globe are failing to catch up to rapidly changing times, and Korea is no exception. If the gig economy is going to continue its growth, a massive deal of scrutiny on its regulations is in order. While gig economy has the potential to become the rosy future which proponents dream of, it likewise carries the menacing potential of turning into another dagger in the heart of the middle class.