Coupang to directly hire 6,500 package sorting workers within this year

[Photo by Yonhap]

Coupang’s logistics subsidiary, Coupang Logistics Services (CLS), has announced plans to directly hire 6,500 package sorting workers by the end of this year. This move aims to address the issue of workers not being covered by industrial accident insurance due to indirect employment through subcontractors. Additionally, CLS plans to invest 200 billion won ($146.4 million) to further automate its sorting facilities within the year.

According to industry sources on Sunday, CLS will convert all 6,500 workers responsible for sorting packages into direct hires by year-end. Since 2021, CLS has been gradually transitioning these workers from subcontracted positions to direct employment, with the current direct hire rate at 80 percent, representing 5,200 workers. CLS intends to increase this number by 1,300 workers to achieve a 100 percent direct hire rate.

Package sorting is a task where packages are divided according to their delivery destinations, ensuring accurate delivery and preventing errors. Most logistics companies do not directly employ their sorting staff. For instance, CJ Logistics indirectly employs around 7,000 sorting workers through agencies, and Lotte Global Logistics employs around 1,500 part-time workers at its sorting centers.

CLS’s decision to fully transition to direct hiring is the first of its kind in the industry and seeks to address the long-standing issue of the social insurance blind spot within the logistics sector. In July, a comprehensive investigation by the Korea Worker’s Compensation & Welfare Service revealed that subcontractors contracted with Coupang had failed to enroll workers in industrial accident and employment insurance, leading to a 4.7 billion won fine for unpaid insurance premiums and a 296 million won penalty. The investigation found that 40,948 workers at 90 subcontractors affiliated with Coupang were not enrolled in these insurances, raising concerns about Coupang’s responsibility in the matter.

By employing a large number of sorting workers directly, CLS expects to allow delivery personnel to focus solely on deliveries, reducing their working hours. CLS also believes that direct hiring will simplify social insurance administration and completely resolve the issue of non-enrollment in industrial accident insurance.

CLS has been accelerating the automation of its sorting facilities, including the introduction of “autosorter” machines, which automatically sort packages based on the shipping labels attached to them. CLS has also announced plans to invest an additional 200 billion won in sorting facility automation by next year, aiming to improve the working conditions of sorting staff.

Coupang’s employment scale continues to grow, significantly impacting the national economy. Last year, Coupang surpassed Hyundai Motor Company to become the second-largest employer in South Korea after Samsung Electronics. Although many of Coupang’s hires are short-term contract workers, the company is recognized for providing job opportunities for young people struggling to find work and for middle-aged women with career gaps due to childcare. As of the end of last year, the number of workers directly employed by Coupang and its logistics subsidiary totaled 69,057, exceeding Hyundai Motor’s 68,427.