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Small businesses demand minimum wage freeze
Members of Korea Federation of Micro Enterprises hold a press conference at the group's headquarters in Yeouido, Wednesday. Yonhap
By Lee Kyung-min
By Lee Kyung-min
A group of small businesses are balking at a 24.7 percent year-on-year increase in the state-set hourly minimum wage for next year demanded by labor groups, according to market watchers, Wednesday. The group said small businesses are unable to make ends meet due to rising costs.
Strengthening their collective demand are sales remaining sluggish since the onset of the COVID-19 pandemic, compounded by rapid recent increases both in borrowing rates and energy costs.
They said next year's hourly minimum wage should be left unchanged at this year's 9,620 won, squarely rejecting the labor group's demand for 12,000 won. Last year's figure is a steep increase of nearly 50 percent from 6,470 won in 2017.
Korea Federation of Micro Enterprises, a group of small businesses, said the labor groups are making demands that are “completely out of touch with reality.”
“The figure of 12,000 won is simply not what we can afford to pay to our workers,” said the group's head Oh Sei-hee during a press conference at the group's headquarters in Yeouido, Seoul.
The hourly minimum wage already stands at 11,544 won, if it factors in extra for not taking paid weekend leave, they said. The figure is 62.2 percent of median income as of 2020, the seventh-highest among the Organization for Economic Cooperation and Development (OECD) member countries, a group of advanced economies.
The figure has been on a steady rise starting with a 50 percent increase in 2018.
The group said the government policy should be promptly revised to lift the uniform application of the “high” minimum wage. The status quo disregards the size of employers' operations, they said.
“Large conglomerates and relatively well-to-do mid-sized enterprises may not understand how soaring labor costs could tank the small businesses,” Oh said. “The prominent polarization of wealth and profit long skewed in favor of large entities is only hurting small businesses still reeling from the fallout of years of pandemic-scarred living conditions. The government should revise policies to help unburden small entities with unreasonable hikes in labor costs.”
Some of the group members took a step further and asked that the government shoulder 50 percent of the minimum wage paid to entry-level workers in training.
“Hair design needs hours of one-on-one training for months, a must for the beginners with no experience,” said Yoo Eun-pa, a hair salon owner at the conference.
“The government should pay half of what we are required to pay to new workers, otherwise the hair salons along with other services industries won't survive.”