Do Convenience Stores With No Staff Signal a Future with Fewer Jobs?

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Inside, the convenience store looks like any of the countless shops one finds on almost every street in South Korea. Under bright fluorescent lights there are shelves of instant noodles and snacks, refrigerators stocked with iced coffee and soft drinks, racks of mobile phone chargers and cables.

But unlike other convenience stores, the cigarettes are in a machine, and there are no alcoholic beverages. The biggest difference is near the entrance: Instead of a full-sized counter helmed by a human being, there are only two self-checkout machines, where customers can ring in their purchases and pay by scanning a credit or debit card. The store is one of a new kind of convenience store, one with no staff, where customers shop on their own, and ring up their own purchases.

Coming from the speakers was classical music at what seemed like much higher volume than normal for a store, perhaps intending to drown out the eeriness of being in a room filled with mounds of goods meant to meet the immediate needs of people, but with no actual people.

Outside the store, operated by South Korean retail giant Emart, is a sign that reads, “A new lifestyle.” Indeed, these staffless stores are a potential landmark in a much bigger conversation over whether advances in technology will result in widespread job losses and a future where real human interactions are replaced by increasingly clever machines.

The introduction of unstaffed convenience stores to South Korea could lead to the elimination of hundreds, perhaps thousands, of mostly part-time jobs, and comes at a time of debate over the future of low-wage labor.

Fight for 10,000 won

If there is a significant hike in minimum wage, such unstaffed convenience stores could become the norm, as more companies decide to lay off workers instead of paying them more.

The government of President Moon Jae-in, in power since May, has made raising the minimum wage a lynchpin of plans for what he calls “income-led growth,” which boils down to boosting regular workers’ earnings with the expectation that those workers will spend their extra money and spur growth.

At 15 percent, an unusually large portion of South Korean workers earn minimum wage (the OECD average is 5.5 percent). In July, the South Korean government announced that as of next year, the wage these workers earn will rise by 16 percent to 7,530 won (about $6.50) per hour. That was the largest annual increase since 2001, and President Moon Jae-in has said he plans to increase minimum wage to 10,000 won by 2020.

Moon is pledging to improve economic conditions for regular people amid public discontent with two consecutive conservative presidents (Lee Myung-bak and Park Geun-hye, in office 2008-16) who presided over a steep rise in income inequality. Critics from the left of the political spectrum accused those administrations of kowtowing to South Korea’s corporate conglomerates — Samsung, Hyundai, et al — as those companies came to dominate more of the economy while small and medium sized businesses struggled to compete.

But not everyone is convinced that a minimum wage hike is the wisest way to address yawning income inequality. A survey released in July by job searching site Albamon found that both workers and business owners are fretting over the coming increase. 72.9 percent of part-timers say they’re concerned about the possibility that higher labor costs will lead to layoffs and fewer available jobs, and 90.5 percent of business owners are worried that the increased costs will force them to cut staff.

There is no firm consensus among economists regarding whether raising the minimum wage is a wise move. Some economists argue that increasing the earnings of low wage workers (who are more likely to spend extra money) boosts the economy by fuelling consumption. Others argue that higher wages will bring inflation to harmful levels.

A more pressing concern is the risk that higher wages will result in fewer jobs. A study released in September by Seoul National University Professor Lee Jung-min argues that a one percent increase in the minimum wage would result in a 0.14 percent reduction in jobs. Lee’s analysis found that a sustained increase in minimum wage will push owners to make capital investments aimed at replacing workers.

The reduction in jobs was particularly pronounced for women, older workers, workers with short tenure in their positions, and businesses with between five and 29 employees. Lee told Korea Exposé that those groups are disproportionately affected because “they are less skilled so their labor could be replaced by capital or skilled labor more easily.”

And convenience store workers are relatively easy to replace. In South Korea, most people who work in convenience stores are high school or university students looking to make extra money, or older people who have retired. Nearly all of them work long shifts for low wages, and the profit margins in the convenience store industry are extremely narrow; in 2015 the suicide of a convenience store franchisee drew attention to the struggles store operators have in turning a profit.

Seeing as convenience store workers are barely getting by, it is natural that they might want their wages increased, but they also fear that higher wages will lead to widespread layoffs. In addition to worker livelihoods, there is also the less tangible question of how neighborhoods could be reshaped by increased automation.

In his book “Convenience Store Sociology,” Seoul National University Professor Jun Sang-in argues that convenience stores have come to occupy an integral position in South Korean neighborhoods. Jun writes, “By providing most of the products and services that people need, convenience stores have affected a ‘unification by absorption’ of all street-level commerce.”

In the U.S., the possibility of neighborhood stores being phased out was met with resistance. In September, a Silicon Valley startup called Bodega unveiled plans for something similar to an unstaffed convenience store — cases featuring a selection of everyday items that customers could scan a credit card to purchase. The company was roasted on social media for appropriating the terminology of a bodega (a Spanish-language term for a local store) with an idea that risked putting many immigrant-owned stores out of business, while erasing the local color of many immigrant neighborhoods.

The South Korean convenience stores that are likely to become unstaffed are corporate-owned outlets with nearly identical stock and decor. The high turnover of low-paid staff means customers probably won’t get to know the staff in their local convenience stores, unlike with family-owned stores that remain in one location for years — the locally owned stores called “supers,” which tend to have less modern appearances and fewer imported products).

This unstaffed convenience store operates daily in the basement of the Chosun Hotel in central Seoul from 7:30 a.m. to 8:30 p.m. The stores aren’t wholly cut off from access to other humans: If customers have problems, they can directly contact Emart staff using an intercom system at the checkout. It is one of four unstaffed stores Emart is currently operating in South Korea.

For now it is a rarity in South Korea (whereas such stores are already far more numerous in China), but novelty may not last for long. Beyond the economics, one recently published online column argues that the minimum wage is a matter of dignity, that a higher wage would give workers the freedom to quit jobs they felt were unfair or had uncomfortable working conditions. The next question is if between now and 2020, a higher minimum wage will mean that such jobs are improved, or disappear entirely.

 

Cover image: Psy and Snoop Dogg in GS25, a popular convenience store chain in South Korea. (Source: YouTube screen capture of Psy’s MV “Hangover“)

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