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Up to 69,000 jobs to disappear if minimum wage raised to 10,000 won, says lobby group
Labor group members hold a rally in front of the labor ministry's Seoul branch office, May 25. Yonhap
By Lee Kyung-min
By Lee Kyung-min
Up to 69,000 jobs will disappear if the state-mandated hourly minimum wage is raised to 10,000 won ($7.68) next year, according to a study by a business lobby group, Monday.
Young, low-income groups and small businesses will be affected the most by the possibility of fewer jobs, a hardship certain to exacerbate the prolonged economic slowdown defined by the dreaded combination of drops in consumption and business activity in the economy.
Experts say rapid across-the-board wage hikes should be revised to better reflect the needs of employers, after a thorough review of the intensity of labor and the productivity of specific industries. Otherwise, more businesses will be pushed into bankruptcy, amplifying default risks in the economy.
Members of the minimum wage commission that represent labor groups said that the figure for next year should be raised to 12,210 won. The 26.9 percent year-on-year increase will translate to a monthly income of over 2.55 million won, provided that 209 hours are worked.
Study
The Federation of Korean Industries (FKI), a business lobby group, said that between 28,000 and 69,000 jobs will be slashed if this year's minimum wage of 9,620 won is raised to 10,000 won next year.
In addition, the lobby group also predicts the possibility of between 194,000 to 470,000 jobs disappearing, if the minimum wage is set to the level recommended by the labor group (12,210).
The lobby group added that the 10,000 won minimum wage would mean that workers aged from 15 to 29 would see up to 18,000 jobs being lost. Additionally, 125,000 jobs for young people could be lost, if the figure were to be set at 12,210 won.
As many as 29,000 jobs will disappear for the bottom 40 percent of the country's income earners, according to the business lobby, if the minimum wage is raised to 10,000 won. At least 207,000 jobs will be lost for the low-income bracket in the case of a 12,210 won minimum wage.
Small businesses with four or fewer workers will see 29,000 jobs being lost in the 10,000-won minimum wage scenario. The cut is forecast to affect up to 196,000 jobs, in the 12,210-won scenario.
The wage increase of nearly 50 percent in just six years is a fixed cost, over which businesses have little wiggle room unless they let a significant number of workers go, according to the former chairman of the Korea Economic Association, Lee In-ho.
“Years of hardship faced by small businesses and low-income groups are not in any way mitigated by the figure increasing 48.7 percent from 6,470 won in 2017 over the past few years,” Lee said. “Recent spikes in energy and raw materials costs only dim the prospects for an earlier-than-expected rebound.”
The Korea Federation of Micro Enterprise representing the country's small businesses said the over-12,000 won figure is simply unacceptable.
“The commission is turning a blind eye to the hardships of low-income businesses,” they said. “The current minimum wage system has been applied uniformly for 35 years with no regard for small businesses, which have to hire part-timers to make ends meet.”
Negotiations at the commission will likely push back the June 29 deadline by about a month. The deadline for making the minimum wage public for the following year is Aug. 5.