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[Editorial] Time to halt stopgap measure

Severe shortage of nighttime taxis illustrates need to rethink regulations

As South Korea loosens social distancing rules this month, the number of people venturing out of their homes is rising sharply. This upsurge of outdoor activities was widely expected.

What’s surprising, though, is that the Korean government appears to be ill-prepared to handle the increase in human traffic and related changes, suggesting that policymakers did not see what was coming with the introduction of the “living with COVID-19” transition.

Even before the restrictions were in place, it was not easy to hail a taxi at night in crowded places like the Gangnam Station area in southern Seoul. But the difficulty of hailing a taxi at night spiked recently due to a mix of factors, including the relaxation of social distancing rules and taxi-related regulatory missteps.

According to Seoul City, average taxi usage between 11 p.m. and 4 a.m. soared 75.5 percent during the Nov. 1-7 period compared with the figures a month earlier, reflecting the recent trend toward greater activity at night.

To deal with the severe shortage of nocturnal transportation, the Seoul Metropolitan Government lifted the three-day rotation requirement for privately owned taxis Tuesday, which will be in effect through Jan. 1, in a belated attempt to meet the increased demand for nighttime taxi service.

The temporary measure allows privately owned taxis to do business for an extended period instead of taking every third day off. City officials predicted that some 2,000 more cabs would be available for nighttime service.

This temporary step, taken for the first time since 2019, will certainly alleviate the cab shortage to some extent, but it is unlikely to fix the structural shortage of drivers that has developed since the onset of the pandemic.

The number of taxi drivers stood at 242,622 as of August this year, down 25,655 or 9.5 percent from September 2019, according to data from the Korea National Joint Conference of Taxi Association. The decrease translates into a shortage of over 5,500 cabs during the nighttime period, compared with pre-pandemic numbers.

One of the underlying problems is that the lifting of the three-day operating restrictions on privately owned cabs cannot last long, as corporate-owned taxi drivers take issue with the problem of a two-tier market that puts them at a disadvantage. Under the current system, privately owned cabs can freely adjust their business hours, now even without the three-day rotation rule, but regulations prevent corporate-owned taxis from changing their schedules.

Another critical issue is the dearth of younger taxi drivers in recent years, a reflection of deteriorating profitability and worsening working conditions at taxi firms.

During the pandemic, a sharp drop in demand for cabs forced drivers to seek jobs elsewhere, most prominently platform-based delivery businesses that offer more money and do not have the daily revenue targets that corporate-owned taxis have to meet.

The taxi industry has to reconsider its own shortsighted stance. Despite the outflow of drivers, taxi companies have consistently tried to drive away new market entrants that have innovative business models. Worse, the country’s politicians, mindful of their votes in elections, took steps that eventually killed off new types of transportation services.

As Kakao Mobility pushed for a carpool service, the government worked out what it called a “win-win deal” for both cab drivers and a platform service provider in March 2019. The resultant policy set the business hours of carpool service providers at four hours per day, a condition that did not make much business sense. Not only Kakao Mobility but other nascent carpool operators ditched their services in the face of the resulting poor business environment.

In June this year, the Constitutional Court upheld the March 2020 revision to the Passenger Transport Service Act that effectively suspended the operations of Tada, a homegrown ride-hailing service, saying its rented van transportation service had “greatly increased social conflicts” as it ran a taxi service while bypassing the regulations imposed on the existing taxi industry.

To resolve the mismatch of supply and demand in the taxi industry in the long term, the government and lawmakers should take more forward-looking positions to remove rigid regulations and introduce new types of public transportation services such as demand-responsive transport, a flexible-route bus service that is undergoing a pilot run in the central administrative city of Sejong.

The Korean government has long been stacking up obscure and unreasonable layers of regulatory hurdles for startups. It is high time for policymakers to shift its focus from stopgap measures to long-term solutions that will help the embattled taxi industry get back to normal and offer reliable, much-needed services.

By Korea Herald (
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