South Korea’s lawmakers and labor unions legalized the full salary system for taxi drivers in 2019 under the pretext of protecting taxi drivers. This was in response to criticisms that the existing commission system drove taxi drivers to overwork, increasing accident risks. The commission system required taxi drivers to deposit 130,000 to 150,000 won per day with the company and keep the rest. The entry of mobility services such as Uber, which are common overseas, was also legally blocked to protect taxi drivers.
The salary system mandates that corporate taxi drivers work at least 40 hours per week and receive a fixed monthly salary of over 2 million won. It was introduced to ensure stable income for corporate taxi drivers.
However, drivers are not welcoming the salary system. Both labor and management in the taxi industry expressed concern on August 19, warning that “this out-of-touch regulation could lead to the industry’s collapse” as lawmakers discussed its nationwide implementation. A taxi company representative noted, “We’re already struggling due to the coronavirus, and paying fixed salaries regardless of revenue will push many companies into bankruptcy.” According to the Ministry of Land, Infrastructure, and Transport, each taxi must generate over 5 million won monthly to cover a 2.06 million won salary, but last year, only Seoul’s corporate taxis averaged more than 5 million won (5.09 million won).
Taxi drivers also worry that their actual take-home pay will decrease. They argue, “Why implement a salary system when I can earn more by working hard?” and “If everyone works just enough to get their salary, diligent drivers will suffer.” A 60-year-old taxi driver said, “Young drivers are leaving for the booming delivery industry, and now most of the drivers on the ground are elderly or those working part-time,” adding, “If we’re forced to work over 40 hours a week, many will have to look for other jobs.”
A survey conducted by the Seoul Metropolitan Government in 2022 of 7,414 corporate taxi drivers found that 43.4% preferred the existing commission-based system, while only 8.7% favored the salary system. In June, both the Federation of Korean Taxi Workers’ Unions (KTU) and the Korean Taxi Workers’ Union under the Korean Confederation of Trade Unions (KCTU) released statements that the salary system was “an unfeasible policy.”
Transportation experts warn that regulations intended to protect taxi drivers have weakened the industry’s competitiveness, and coupled with the effects of the coronavirus, the survival of both taxi companies and drivers is now at risk. Although new services like Uber and Tada have been blocked under the guise of protecting taxi drivers, the taxi industry has continued to decline, and drivers’ insecurities have grown. The crisis in the taxi industry is reflected in the numbers. According to the Korea National Joint Conference of Taxi Associations, over the past five years (2019–2024), the number of corporate taxis nationwide has decreased by 15,729 units (20%), from 79,291 to 63,562. The number of taxi drivers has also dropped by 31%, from 102,320 to 70,679. This means that one in three corporate taxi drivers has left the industry over the past five years, resulting in an operational rate of just 30% for corporate taxis. In other words, seven out of ten taxis are sitting idle in company garages.
Critics argue that the full salary system for taxi drivers is a “theoretical policy” that disregards reality. They claim that when the KCTU pushed for the full implementation of the salary system, the politically sensitive issue was legalized without thorough examination. As a result, an ambiguous compromise of a “two-year grace period” was introduced, raising questions about what will happen after the grace period ends. A taxi company staffer in Gyeonggi Province said, “We opposed the legislation back then, calling it ‘legislation that ignores reality,’ but the politicians paid no heed. We are curious about what will happen two years from now.” Lee Yang-deok, executive director of the taxi association, said, “No country in the world regulates taxi management and wage structures so uniformly. To prevent labor shortages due to competition from delivery and other sectors, various forms of employment, including part-time options, should be introduced.”
