Kwak Yeon-soo is a digital editor at The Korea Times creating, editing and curating digital content for the newspaper’s website, mobile app and social media. She previously covered a diverse array of cultural, political and business topics.
Biz communities unhappy with minimum wage hike
A screen shows the result of the minimum wage vote for 2020 at a meeting of the Minimum Wage Commission at the Government Complex in Sejong, Friday. Yonhap
By Kwak Yeon-soo
By Kwak Yeon-soo
Business communities have expressed dissatisfaction with the decision to raise the 2020 minimum wage.
The Minimum Wage Commission ― comprising of representatives from labor, management and the public ― announced Friday that next year's minimum wage has been set at 8,590 won ($7.30) an hour, up 2.87 percent from this year. The council's decision came after a 13-hour discussion.
The 2.87 percent increase is the third-lowest in history and is smaller than the previous rising pace of the wage.
This year's minimum wage is 8,350 won an hour, 10.9 percent higher than last year. In 2018, the minimum wage rose 16.4 percent year-on-year to 7,530, the biggest hike in 17 years.?
A minimum wage hike was one of President Moon Jae-in's key election pledges. He originally promised to raise it to 10,000 won by 2020, but has signaled the need to adjust it to the economic and job situation.
Business representatives initially called for a 4.2 percent cut to 8,000 won, while the labor side demanded a 19.8 percent increase to 10,000 won.
After negotiations, proposals from the labor side (8,880 won) and the public group (8,590 won) were put to a vote. The latter earned 15 votes from a total of 27, to be selected as the 2020 minimum wage.
Two business lobby groups, the Korea Employers Federation (KEF) and the Federation of Korean Industries (FKI), expressed concern at the decision.
“Considering that the minimum wage has soared by 29 percent for the last two years and the dwindling internal and external economic conditions, the minimum wage for 2020 should've been frozen,” the KEF said.
The FKI said the decision will ruin small businesses. “We're deeply worried that this decision will impact the existence of medium and small businesses in the country,” it said.
The Korea Federation of Micro Enterprise (KFME) said it regrets the decision, calling on the government to amend the minimum wage system.
“We, the small merchants, cannot endure the current minimum wage level,” the KFME said. “The government should come up with subsequent procedures to minimize our pressure.”
Experts said that given unfavorable environments at home and abroad, the government should listen to business communities.
“Until now, the Moon Jae-in administration has focused highly on improving labor market environments and creating jobs,” said Kim Tai-gi, a professor at Dankook University. “But from now on, it should shift the focus of policies to revitalize business sectors.
“There is a possibility that the minimum wage hike will have to be lowered in 2021, given the unfavorable economic conditions.”