Taxi shortage traced to pay system overhaul in 2020

A passenger waits for a taxi near Seoul Station, central Seoul. [YONHAP]

Despite the carrots the government is offering to solve the late-night cab shortage — such as raising taxi fares and lifting the shift system — taxi drivers think the problem won’t be solved until the way they are paid is overhauled.

At a public hearing in September, the Seoul Metropolitan Government said it believed the current taxi shortage would worsen ahead of the end of the year. In order to solve a shortage, the city government noted that about 7,000 more cabs are needed.

Taxi drivers say many have abandoned the industry for better-paying jobs with delivery or courier services and to get away from a fixed monthly pay system introduced to the taxi industry in Jan. 2020.

In a monthly pay system, corporate taxi drivers pay all fares to their company, and in return, they receive a salary of a fixed amount agreed between the corporate and the trade union.

In the old system, taxi drivers turned over 130,000 won or more in fares to their employer and kept the rest, which was criticized for pushing drivers to work long hours to make more.

Industry insiders say the number of corporate taxi drivers decreased by nearly 10,000 in the past three years, partly due to the monthly pay system. There are 22,603 corporate taxis in Seoul, accounting for 31 percent of its taxis.

It turns out the monthly pay system has features that have made it unworkable: the payment of a "transportation income standard" every month from their salary and other deductions.

Even taxi companies oppose to the monthly pay system.

According to a survey released by the Seoul Metropolitan Government on Oct. 5, 90.8 percent of taxi companies and 64.7 percent of drivers said they opposed the monthly pay system.

Taxi companies say drivers are quitting because of it. Only 32 percent of corporate taxis are in operation, meaning that seven out of ten corporate taxis are in the parking lot because there are no drivers for them.

“It looked good at the start,” said Oh Bong-hoon, secretary-general of the Federation of Korean Taxi Workers’ Union Seoul Headquarters. “But in the end, all the drivers left and companies became unable to continue business.”

As an alternative to the monthly pay system, the revival of the previous system or the introduction of a lease system is being considered, with each having its pros and cons.

Under the former wage system, drivers didn’t have a fixed salary but they were encouraged to work harder.

The lease system — proposed by the Seoul Metropolitan Government — is a method in which a corporate taxi company rents a transportation business license and vehicle to a taxi driver and receives a certain amount of rent.

Although it could raise the income and bring in more manpower, it could turn into an illegally-contracted taxi, in which people without taxi driver licenses could be behind the wheel. If the lease is over-priced, it could fail to improve labor conditions — and get more drivers on the road.

The transport ministry said it will review introducing the lease system and improving the current monthly pay system by forming a consultative body on Oct. 4.

BY LEE SU-MIN, SEO JI-EUN [seo.jieun1@joongang.co.kr]