By Yoon Ja-young
The minimum wage was raised to 7,530 won ($7) starting this year, but it seems that employers are not ready to introduce the 16.4 percent hike. Some are flatly ignoring the hike, while others are taking diverse tactics to cut labor costs, nullifying its effect.
According to the Korean Confederation of Trade Unions, major universities in Seoul are replacing full-time janitors with part-time workers. Yonsei University, where a score of janitors are scheduled to retire, plans to hire part-time employees who will work two or three hours a day. Korea University also notified the labor union there that it will hire part-time workers to fill vacancies following the retirement of 10 janitors.
Residents of apartments, who hire private security guards, are also taking diverse measures to decrease the wage burden following the hike. The residents' committee at an SH apartment complex in Seoul fired two security guards to save on costs. "I wish that we could continue employing them all. The security guard of my apartment building used to receive parcels for me when I was out. It will be inconvenient without him, but it seems that other residents wanted to save money," one resident of the apartment said. People at other apartments who have decided to continue employing all of the guards are minimizing their burden by extending break times, especially at night when they are paid 1.5 times the minimum wage.
Some employers seem to be ignoring the minimum hike. A few convenience store owners who posted recruitment information at part-time job portals still offer wages lower than the minimum. According to Hana Financial Investment, the net profit at convenience store franchisees is expected to drop 14.3 percent following the wage hike.
Parents hiring babysitters are also affected. A working mom in Dongtan, Gyeonggi Province, who uses a babysitter dispatched by the government, said, "I sent my son to my mother-in-law during the vacation to lessen the financial burden. I agree that minimum wage should be raised, but I get mixed feelings as I have to pay more than I expected."
Some businesses have stopped providing subsidies for meals or transportation expenses. As a result, the total amount that the worker gets hasn't risen as much.
Experts say that it was all expected.
"All these side effects were expectable. The minimum wage hike was aimed at increasing income, but it may end up decreasing income and slashing jobs. The government was too hasty," said Shin Se-don, an economics professor at Sookmyung Women's University.
"Employers will slash employees' working hours. This means they will get paid less or at least not more than before. They will also replace full time workers with part time ones. The government subsidizes small employers for the minimum wage hike, but we should note that those who hire more workers are not getting any help. It means the number of jobs will dip while income will not increase as much. The government had good intentions, but the outcome is likely to be bad," he added.
According to Albamon, a part-time job information provider, recruitment of part-time workers at retail and sales businesses totaled 156,295 last month, down 7.3 percent from a year ago. Employers reduced hiring ahead of the wage hike.
"Following the approval of the minimum wage hike last year, jobs have been decreasing at convenience stores, restaurants and lodgings. The minimum wage hike should lead to higher productivity in theory, but it is doubtful whether productivity in these sectors will rise as much as 16 percent," Prof. Shin said.
The minimum wage was raised to 7,530 won ($7) starting this year, but it seems that employers are not ready to introduce the 16.4 percent hike. Some are flatly ignoring the hike, while others are taking diverse tactics to cut labor costs, nullifying its effect.
According to the Korean Confederation of Trade Unions, major universities in Seoul are replacing full-time janitors with part-time workers. Yonsei University, where a score of janitors are scheduled to retire, plans to hire part-time employees who will work two or three hours a day. Korea University also notified the labor union there that it will hire part-time workers to fill vacancies following the retirement of 10 janitors.
Residents of apartments, who hire private security guards, are also taking diverse measures to decrease the wage burden following the hike. The residents' committee at an SH apartment complex in Seoul fired two security guards to save on costs. "I wish that we could continue employing them all. The security guard of my apartment building used to receive parcels for me when I was out. It will be inconvenient without him, but it seems that other residents wanted to save money," one resident of the apartment said. People at other apartments who have decided to continue employing all of the guards are minimizing their burden by extending break times, especially at night when they are paid 1.5 times the minimum wage.
Some employers seem to be ignoring the minimum hike. A few convenience store owners who posted recruitment information at part-time job portals still offer wages lower than the minimum. According to Hana Financial Investment, the net profit at convenience store franchisees is expected to drop 14.3 percent following the wage hike.
Parents hiring babysitters are also affected. A working mom in Dongtan, Gyeonggi Province, who uses a babysitter dispatched by the government, said, "I sent my son to my mother-in-law during the vacation to lessen the financial burden. I agree that minimum wage should be raised, but I get mixed feelings as I have to pay more than I expected."
Some businesses have stopped providing subsidies for meals or transportation expenses. As a result, the total amount that the worker gets hasn't risen as much.
Experts say that it was all expected.
"All these side effects were expectable. The minimum wage hike was aimed at increasing income, but it may end up decreasing income and slashing jobs. The government was too hasty," said Shin Se-don, an economics professor at Sookmyung Women's University.
"Employers will slash employees' working hours. This means they will get paid less or at least not more than before. They will also replace full time workers with part time ones. The government subsidizes small employers for the minimum wage hike, but we should note that those who hire more workers are not getting any help. It means the number of jobs will dip while income will not increase as much. The government had good intentions, but the outcome is likely to be bad," he added.
According to Albamon, a part-time job information provider, recruitment of part-time workers at retail and sales businesses totaled 156,295 last month, down 7.3 percent from a year ago. Employers reduced hiring ahead of the wage hike.
"Following the approval of the minimum wage hike last year, jobs have been decreasing at convenience stores, restaurants and lodgings. The minimum wage hike should lead to higher productivity in theory, but it is doubtful whether productivity in these sectors will rise as much as 16 percent," Prof. Shin said.
![[INTERVIEW] Choi Min-sik, Lee Dong-hwi on creating Korean-style noir with 'Big Bet'](https://img.koreatimes.co.kr/upload/thumbnailV2/8b795a8f6b42492db4e8fdc47e9abd8d.jpg/dims/resize/178/optimize)
