Value context and insight. lkm@koreatimes.co.kr
Small businesses decry 5% minimum wage hike
A jobseeker passes by a board of job listings on the wall of a state-run employment agency in Seoul, Thursday. Yonhap
By Lee Kyung-min
By Lee Kyung-min
Kim Joo-won, 42, who owns a small restaurant in Seoul, said Thursday that he will have to let at least one worker go if the government's new hourly minimum wage takes effect next year.
“The minimum wage has been on a sharp rise in recent years, and it is certain to rise yet again next year. I can't take it anymore,” Kim said.
The restaurant owner said his business is far from making a meaningful turnaround after years of the COVID-19 pandemic, and the minimum wage hike is not helping him.
Kim said he had to lay off a couple of minimum wage workers two years ago at the beginning of the health crisis, mostly because of limitations on private gatherings and restrictions on operating hours.
The government's lifting of most social distancing rules in April was a move he had been awaiting for a long time, but the effects have yet to sink in fully, he said.
“I don't know how the government is justifying raising the hourly wage without factoring in the difficulties of small business owners. Labor costs are something that I cannot cut. Otherwise, I will be fined for breaking the law. The only answer therefore is to let the workers go,” Kim said.
Kim's frustration came on the heels of the government's announcement that the state-set minimum wage will be increased to 9,620 won ($7.41) per hour, up 5 percent, or 460 won, from a year earlier.
The decision was protested by not only small business owners including Kim, but also by business groups across the board, large and small.
The Korea Enterprises Federation (KEF), which represents the interests of employers, issued a statement criticizing Wednesday's “growth-stunting” decision.
The group said the 5 percent increase disregards the years of suffering endured by employers grappling with spiking prices of goods and services, rising borrowing costs and the sharp depreciation of the Korean won compared to the U.S. dollar.
“We express deep regret about the state-set minimum wage for next year, a factor certain to push many people out of business,” it said in a statement.
The minimum wage commission members representing the voices of the public said the 5 percent figure is lower than the consumer price growth rate of 6 percent. However, the employers' group said Korea's minimum wage increase over the past five years amounted to a total of 41.6 percent, four times higher than the average 9.7 percent consumer price jump during the same period.
“OECD data showed Korea's minimum wage relative to its median wage stood at 62.6 percent this year, up to 31 percentage points higher than Korea's advanced global peers including the U.S., the U.K., Germany and Japan,” it said.