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Thu, December 12, 2019 | 02:07
Labor & Environment
Good and bad sides of minimum wage raise
Posted : 2017-07-17 17:00
Updated : 2017-07-17 19:07
Kim Se-jeong
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 An employee works at a franchised restaurant in Seoul, Monday, one day after Korea decided to increase the minimum wage to 7,530 won in 2018. / Yonhap
An employee works at a franchised restaurant in Seoul, Monday, one day after Korea decided to increase the minimum wage to 7,530 won in 2018. / Yonhap

Workers joyful, but express worry over job security

By You Soo-sun, Kim Se-jeong


Han Ji-young, a 22-year-old college student, began working last year at a cafe in Geumcheon-gu, southwestern Seoul. Like many other college students with part-time jobs, she believes the recent minimum wage increase will help her better meet her living expenses.

"I'm optimistic about the change, especially as it will help lessen the burden on my parents," she said.

But Han believes it did not go far enough. "The pay is too little compared to the work I'm asked to do. I know other cafes pay better, so I was expecting a bigger increase to close that gap ― it will help, but it's not enough."

And like Han, many college students did not see this as a significant change. Kim Sung-min, 21, was also unsatisfied. "It's going to help pay for textbooks and provide extra pocket money, but it falls way short of covering my school tuition."

The decision to increase Korea's minimum wage next year by 16.4 percent to 7,530 won ($6.67) came Saturday and is the largest jump since 2001. It is expected to affect 4.6 million employees, equivalent to 23.6 percent of the workforce.

In response to the change, Korean Confederation of Trade Unions on Sunday issued a statement against it, saying it is significantly lower compared to the 10,000 won it has been pushing for. Choi Ki-won, spokesperson for Alba Union which represents part-time workers, also commented it was not sufficient to meet the living cost, which was estimated at a monthly 1.67 million won, higher than the average wage of 1.57 million won to be provided under the new agreement.

Employees' sentiments toward the settlement, in general, have been optimistic. But others expressed concerns as to how it will affect their job prospects.

"I'm concerned I won't be able to work the same hours next year," said Song Chan-sol, 25. "I think it's okay as it is."

Song has been working for two convenience stores in Seoul for the past three years. He also felt this would negatively affect his relationship with the owners who told him about cutting down on help.

Choi Da-eun, 22, also has a lot of experience working in the service sector and for small-and medium-sized companies. She has noticed dwindling job opportunities since she first began working four years ago and is worried the wage hike will further damage the job market.

"It was necessary as prices have been going up," Choi said. "But at the same time, I'm worried. Even now, it's so much harder to find a full-time job. Many convenience stores only hire those with experience and many stores only get help for a few hours a day during their peak hours," she said. "I fear it's only going to get more difficult."

 An employee works at a franchised restaurant in Seoul, Monday, one day after Korea decided to increase the minimum wage to 7,530 won in 2018. / Yonhap
A poster in a shop window advertises vacancies at a small business. Some business owners worry that they will suffer from the agreed minimum wage hike for next year. /Yonhap

Small business owner decries minimum wage hike


Park Mal-seon, 55, operates a franchise of the convenience store chain GS25 in Ulsan, 300 kilometers south of Seoul.

Her 24/7 shop is one of the successful ones in town, with daily sales reaching 2 million won on average, and she employs three part-time workers.

Yet, she is seeking to sell her business due to a financial crunch. She was troubled by last weekend's news about the minimum wage hike for 2018 but felt relief as well.

"Paying my three employees has always been a big burden because there is so little left for me," Park said. "I am so relieved that I am done with this."

Park is among 5.7 million small business owners who opposed the minimum wage hike to 7,530 won ($6.67) next year.

The amount she takes home at the end of the month is less than 2 million won.

Despite record-breaking sales, she had to send a lot of the profit to the mother company, GS Group. She was responsible for paying the utilities in addition to the wages for the three part-timers. Her profit even shrank after she purchased workers' compensation insurance for her employees which for business owners is required by law ― she somehow avoided paying it until last fall and was fined 2 million won.

"I've wanted to sell the shop so badly. I earned little money for my time and effort," Park said. "I was at the shop every day all day long. I paid my workers the minimum wage, but I paid myself less. With the minimum wage hike, my profit would be reduced again." She added that President Moon Jae-in's plan to increase the minimum wage would only push small businesses further over the edge.

"You know what will eventually happen? Small businesses will not be able to bear the burden. They will go bankrupt and businesses will be closed. That means fewer jobs," she said. Asked about the government's plan to subsidize struggling small businesses, she only expressed skepticism.

The shop's new owner will be one of her relatives. Beginning in August, she'll be his employee, paid by the hour. "With my knowledge and experience, he is hoping to keep the cost as low as possible. He's much younger than I am and can stay in the shop longer."

President Moon is expected to continue his push to raise the minimum wage ― he vowed to push it to 10,000 won per hour by 2020. The government promised financial help to fill possible losses for small business owners.

Although the government remains optimistic that raising the minimum wage will contribute to narrowing the gap between the haves and the have-nots, opponents remain skeptical.

"I think this is a suicidal attempt to kill Korea's economy," said Prof. Lee Byung-tae at the KAIST College of Business.









Emailssyktimes@gmail.com Article ListMore articles by this reporter
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