Gov't sticks to 2019 minimum wage amid dispute

Employment and Labor Minister Kim Young-joo talks about next year’s minimum wage of 8,350 won ($7.4) during a meeting with labor-related state organizations at the Government Complex in Sejong, Friday. / Yonhap

By Kim Jae-heun

The government said Friday it was sticking to 8,350 won ($7.4) per hour as next year's minimum wage despite strong protests from businesses against what they call a “sharp increase.”

The Ministry of Employment and Labor has rejected calls from businesses to reconsider the 10.9 percent rise for 2019 from the current 7,530 won, and following a 16.4 percent rise this year.

Businesses and unions can submit objection to the Minimum Wage Commission's decision and the labor minister can request a review of it if he feels there is a reason to do so.

After the commission announced the plan in mid-July, the Korea Employers' Federation (KEF), the Korea Federation of SMEs and the Korea Federation of Micro Enterprises submitted objections, saying the government had not considered their ability to cover the increased labor costs.

“We thoroughly examined the complaints filed by the business sector, but decided not to request a review, because the decision reflects the current economy and the employment situation as well as the need and difficulties of both businesses and workers,” Labor Minister Kim Young-joo said in a meeting with labor-related state organizations at the Government Complex in Sejong.

“We invited experts from various fields including management, economics and law for advice on the minimum wage. Most of them agreed that next year's minimum wage is fair, but suggested the government provide support measures for small business owners,” Kim said.

The minister promised the government would do its best to do this.

Following the rejection, the minimum wage will be enforced at all workplaces regardless of business type.

Members of the Korea Federation of Micro Enterprises gathered at Gwanghwamun Square in central Seoul, Friday, to denounce the government’s decision not to review the new minimum wage for next year, set at 8,350 won ($7.40). They pledged to hold a massive protest, Aug. 29. /Korea Times photo by Oh Dae-keun

The business sector reacted angrily to the decision, saying companies, especially small ones, will not be able to handle the increase in labor costs.

“The government plan does not consider productivity and economic growth, and will not only affect small businesses but also mid-sized firms. It will put financial pressure on enterprises, and economic sentiment could be affected by this,” a KEF official said.

He said the wage rise could jeopardize the jobs of people in the lower-income bracket, who are supposed to be the beneficiaries of the increased minimum wage. This was already seen this year when the 16.4 percent hike made small businesses dismiss many part-time workers to avoid paying more.

The minimum wage increase is in line with the Moon Jae-in administration's earlier plan to raise it to 10,000 won per hour by 2020. However, Moon retracted this promise last month saying that it would be too steep and too rapid.