ED Minimum wage hike

President should stop clinging to problematic pledge

One of President Moon Jae-in’s pledges for reducing income disparity was to raise the hourly minimum wage. After taking office, he pledged to gradually raise the minimum wage to 10,000 won by 2020.

Moon’s pledge was put into practice Jan.1. The minimum wage has increased by a whopping 16.4 percent to 7,530 won per hour.

Despite mounting complaints, Moon seems adamant about his policy of raising the minimum wage. “In the beginning there could be some confusion, but in the long term it will have a significant impact on the sustainable growth of our economy,” Moon said during his first meeting with senior presidential aides at Cheong Wa Dae, Monday. “It is a policy that must be carried out to address the extreme income disparity and enable workers to lead a stable life.”

It is necessary to close the widening income disparity and support low-income earners who are struggling with rising living costs. But the hike is already causing some problems particularly for small business owners as well as workers.

Before unilaterally pushing for the plan, the government should make note of the rising concerns of the business sector. The sector has resisted the plan to raise the minimum wage, claiming soaring labor costs will strain management. In particular, small business owners who run convenience stores and restaurants, among others, are already complaining of additional difficulties in management since the minimum wage hike was put into practice earlier this month.

News reports have shown the side effects of the minimum wage hike policy. Some small businesses have either downsized their staff and some in the food services sector are already increasing their prices to deal with extra costs of paying their employees. A recent survey by the online job portal “Alba Heaven” showed that 72 percent of the respondents say they feared additional difficulty in finding jobs or getting sacked in the aftermath of the minimum wage hike. Another survey showed that more than 80 percent of small businesses had no hiring plan this year.

President Moon should reconsider the pledge of raising the minimum wage to 10,000 won by the end of his term. The government is aiming to achieve this by gradually raising the minimum wage every year until 2020. This will not be easy since the first year of the minimum wage hike is already facing so much resistance from businesses. The government needs to properly review the feasibility of the plan to raise the minimum wage to 10,000 won within his term.

The President will meet with small-and mid-sized business leaders on Jan. 16. He should earnestly listen to their concerns and reflect them in his policies for boosting smaller firms.