High labor costs lead owners to choose unmanned shops

Economy

Published: 15 Jun. 2023, 17:21 Updated: 16 Jun. 2023, 10:33

High labor costs lead owners to choose unmanned shops

An unmanned ice cream shop [LEE BYUNG-JUN]

Unmanned ice cream shops, which proliferated during the pandemic, are easy targets for thieves. But high labor costs mean owners would rather have a couple of popsicles stolen than hire a new employee.

“I catch over 10 attempted thefts each month, and there are likely more cases that have gone undetected,” said a 43-year-old unmanned ice cream shop owner surnamed Kim, who has been running the store for six years in Daejeon.

But as the loss from the stolen products is smaller than the labor costs, more owners will opt for unmanned shops as labor costs increase, Kim added.

There were 267 unmanned ice cream shops franchised in Korea in 2018, with the number growing to 425 in 2019, 1,178 in 2020 and 1,405 in 2021, according to the Fair Trade Commission’s information disclosure system. The tally had multiplied more than five times in the three-year period and would have been even more if private stores were included in the sum.

“Although there are no confirmed statistics on the number [of all unmanned shops], the scale of growth is likely to be on par with the franchise stores,” an industry source told the JoongAng Ilbo.

One issue with the rising number of unmanned popsicle stores is the high number of theft it entails. There were 6,344 theft cases against unmanned shops between March 2021 and June of last year, namely 13 cases per day, according to the National Police Agency.

Unmanned stores are especially prone to teen thieves.

Cases of adolescents raiding unmanned stores are frequently covered, including one where a group of masked thieves, presumably teenagers, stole from five unmanned convenience stores in Busan in the early morning hours.

A person takes unpaid ice cream products from an unmanned ice cream store in Daejeon in 2022. [DAEJEON METROPOLITAN POLICE AGENCY]

“Some take away the cash register like a robber, but usually it’s grade-schoolers dining and dashing or pocketing a couple of popsicles,” a 26-year-old unmanned store owner in Sejong surnamed Lee said.

The reason why more people choose to open unmanned stores despite the exposure to theft boils down to the rising cost of labor.

The minimum hourly wage in Korea stood at 9,620 won ($7.50) this year, up 15 percent from 2019.

Korea’s two largest umbrella unions, the Federation of Korean Trade Unions (FKTU) and the Korea Confederation of Trade Unions (KCTU), are currently demanding a 25 percent increase in the minimum wage for next year. More than 80 percent of all union members are under the FKTU and KCTU.

“I’ve been thinking of opening a manned store and hiring a part-timer but opened an unmanned one instead because I couldn’t come up with a way to overcome the labor cost,” said a 37-year-old surnamed Lee, who runs an unmanned ice cream shop in Seoul.

“The mental stress over the theft issue is huge, but even then I don’t plan on hiring an employee under current labor costs,” Lee added.

The graph shows the increasing number of self-employeed business owners with no paid employees. [STATISTICS KOREA]

There were 4.27 million self-employed business owners here last year who shared Lee's opinion and did not hire any paid staff. This was the highest number since 2008, according to Statistics Korea.

The Minimum Wage Commission is discussing measures to implement a different minimum wage for each sector to provide a breather for small business owners who barely make a living due to high payroll costs. But workers are rejecting the proposal, arguing that a sector-by-sector minimum wage damages the purpose of the system itself.

“New hiring is bound to decrease if the wage increase is too high,” said Lee Jung-hee, an economics professor at Chung-Ang University.

“The surge in the number of unmanned stores and kiosks is a case in point,” the professor added.

The minimum wage must take into consideration both the living and hiring costs, according to Lee, who raised questions on the practicality of subdividing minimum wages by sector.

BY NA SANG-HYEON, SOHN DONG-JOO [sohn.dongjoo@joongang.co.kr]