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.
But 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 going through political strain and police inquiries over a sequence of accidents and deaths amongst its staff.
According to Korean politicians and the nation’s Public Service and Transport Workers’ union, eight Coupang workers have died over the previous 12 months on account of overwork.
This included two Coupang workers who died over the weekend, the union instructed the Financial Times.
In response to the loss of life on Saturday of a supply driver, the corporate stated: “The deceased worked around four days a week on average and worked about 40 hours for the past 12 weeks”, including that his final day of labor was on February 24.
“The company will actively cooperate in the processes of determining the cause of death, and will spare no efforts in providing all supports to relieve the pain of the bereaved families,” the corporate added. “Coupang will further endeavour to protect the health and safety of the workers even more thoroughly.”
Coupang declined to touch upon the broader allegations.
The firm has declined repeated requests from the FT for interviews over the previous two years.
Analysts stated that whereas the problems had been unlikely to dampen investor enthusiasm for this week’s IPO, they raised questions concerning the sustainability of Coupang’s long-term progress.
“Investors are not paying much attention to Coupang’s labour issues yet, although there are certainly problems with the workload and labour intensity and its ill-treatment of workers,” stated Yoo Seung-woo, an analyst at SK Securities.
In its IPO prospectus, Coupang warned that a few of its operations had been “subject to certain detailed and complex fair trade, labour, employment, and workplace safety laws and regulations, which continue to evolve and have and will continue to affect our operations and financial performance, could subject us to costs and penalties, and may affect our reputation”.
Coupang touts its expertise
Kim, a 42-year-old Harvard dropout, began Coupang as a website providing offers to group consumers. With aggressive advertising and low-cost offers, it turned vastly in style and was the highest app in Google’s Korea Play retailer final 12 months.
In current years, 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 subsequent day.
The firm says this community is the way it outcompetes its fierce rivals, equivalent to Gmarket and Auction, 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 way more reliant on guide staff. They added that Coupang’s largest innovation was utilizing information and synthetic intelligence to search out methods to squeeze these staff.
Go Geon, a former worker 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 grievance. “Hamstring injuries typically happen to professional athletes,” he stated, however added that such accidents “have become like part of the job”.
According to warehouse workers, in the event that they fall behind hourly targets they face public shaming — and the targets are regularly rising. In explicit, staff stated there was an enormous drive for quicker work when Coupang launched same-day fresh-food supply in April 2020.
“The company’s obsession with efficiency is hurting workers’ health. Its innovations are the results of driving the workers to the extreme,” stated Ryu Ho-Jung, a lawmaker for the progressive Justice Party. “If this situation continues, we will see more workers die.”
South Korea’s Labour ministry carried out a three-month investigation into Coupang’s logistics community final September and stated it had discovered staff wanted extra breaks and extra security schooling. It known as for medical check-ups for night-time workers.
“We are watching the company’s labour environment with concern,” stated a ministry official, including that the ministry had met Coupang’s executives final month and requested them to treatment the issues.
Companies 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 obligatory medical insurance coverage for work-related accidents.
But the legal guidelines don’t apply to non permanent staff with out contracts, and unions say there are a lot of loopholes. Korean courts have tended to facet with firms over staff, though staff at Samsung who contracted most cancers whereas making chips have not too long ago received a landmark case.
Seventeen couriers at different Korean supply firms, who usually 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, in line with the supply staff union. Coupang’s supply drivers are full-time workers, and the corporate stated it abided by the 52-hour restrict.
But at its warehouses, 90 per cent of staff are day labourers or on short-term contracts, a better share than at its rivals, in line with labour researcher Jang Kwi-yeon.
“One of the biggest complaints we hear consistently from warehouse workers is that their workload at Coupang is much heavier than its ecommerce rivals,” she stated.
Coupang stated it elevated its warehouse workforce by 78 per cent and invested greater than Won500bn final 12 months in automating its services so as to scale back workload. Nevertheless, 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, in line with the state-run Korea Workers’ Compensation & Welfare Service.
National outcry
In October, Jang Dug-joon, a 27-year-old worker at Coupang’s fulfilment centre in Daegu, was discovered useless within the bathtub in his house shortly after ending his evening shift.
The case sparked nationwide outcry over worker therapy within the ecommerce sector, which boomed in the course of the coronavirus pandemic. According to a authorities investigation, Jang had labored for greater than 62 hours in the course of the week earlier than his loss of life.
Coupang initially denied Jang died due to his work however later apologised for his loss of life after an official verdict that he died of overwork. Coupang promised to offer help for his bereaved household, nevertheless it 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, in line with the union and her household.
“It was -14C that night. And she had to work in the cold warehouse, relying on just a hand warmer,” says Kim Chul-soo, Choi’s brother-in-law. “But the company is denying any responsibility and refusing to meet to discuss the issue.” Coupang declined to touch upon the case.
Last month Joe Nortman, the top of Coupang’s logistics operations, was summoned to a parliamentary listening to on labour situations. He apologised for the loss of life of Jang and different staff and vowed to enhance the corporate’s labour setting.
“I deeply regret all these situations. I think it is a tragedy whenever there is any fatality, whether it’s work-related or not. And I feel we’re going to continue to do our best to improve . . . I think the results need to get better. And we are committed to making that happen,” stated 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. But unions and labour activists say Coupang’s day staff or non permanent staff endure from a scarcity 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.
According 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 stated. Coupang declined to touch upon the union’s declare.
A supply driver working in Seoul’s northern outskirts, who requested to not be named, stated he had no time to eat throughout evening shifts that contain delivering packages to about 150 areas.
“It is not surprising at all if your colleague doesn’t show up the next day. You just assume he quit, because the workload is so unbearable. I am not sure how long I can withstand this,” he added.
Coupang has promised $90m of inventory choices to its frontline staff and non-manager workers, in line with the IPO prospectus. But some staff stated they had been unlikely to have the ability to stay for the 2 years wanted to totally train the precise.
“I am afraid that I may die if I work like this every day,” stated a 53-year-old worker with the surname Kim at Coupang’s Deokpyeong warehouse.
source https://infomagzine.com/coupang-ipo-clouded-by-worker-deaths/
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