ECCK members express concerns over rising wage costs
By Park Jae-hyuk
European business leaders in Korea responded negatively to the Moon Jae-in administration's labor and other economic policies, according to a survey of executives at 108 European companies employing a combined total of 30,000 people.
Releasing the results of the survey, Tuesday, the European Chamber of Commerce in Korea (ECCK) said half of respondents believe that the administration's efforts to increase employment and incomes will not be positive for the nation's overall economy.
The liberal Moon government has promised to raise the minimum wage to 10,000 won ($9.3) by 2020 and hiked it by 16.4 percent to 7,530 won beginning this year.
Against this backdrop, rising labor costs emerged as the second-most significant business challenge for European firms last year, following the country's economic growth. In 2016, increasing wage costs ranked fourth among the top five business challenges by order of significance.
About half of the companies described the business outlook for their industries in Korea over the next two years as pessimistic in terms of labor costs.
"Providing a fair salary for labor is a good thing, but it might be difficult for some industries to maintain the number of employees," ECCK President Christoph Heider said. "An evolutionary increase in the minimum wage would be the preferred way."
Asked about the youth employment quota for the creation of additional jobs, 48 percent of respondents said this will not facilitate job creation. Also, 58 percent of companies regarded converting irregular workers to regular ones as an unfeasible approach and a hindrance to job growth.
"Switching irregular workers to regular workers can be a factor of change in a company's business model," said Barbara Zollmann, the president and CEO of the Korean-German Chamber of Commerce and Industry.
The labor-friendly Moon government's other economic policies also caused concern for 45 percent of respondents who said the measures will end up harming the country's competitiveness.
The survey indicated that 63 percent of European company executives feel the government discriminates against foreign-invested firms here, although the country is still on the European Union's (EU) gray list of tax havens.
Heider defined that issue as something between the EU and the government, not a matter for the chamber.
Despite the concerns, Korea still remains an important market for European companies, given that 44 percent of respondents saw an increasing importance of the country in their company's overall global strategy and 47 percent characterized the country as having the same level of importance as before.
By Park Jae-hyuk
European business leaders in Korea responded negatively to the Moon Jae-in administration's labor and other economic policies, according to a survey of executives at 108 European companies employing a combined total of 30,000 people.
Releasing the results of the survey, Tuesday, the European Chamber of Commerce in Korea (ECCK) said half of respondents believe that the administration's efforts to increase employment and incomes will not be positive for the nation's overall economy.
The liberal Moon government has promised to raise the minimum wage to 10,000 won ($9.3) by 2020 and hiked it by 16.4 percent to 7,530 won beginning this year.
Against this backdrop, rising labor costs emerged as the second-most significant business challenge for European firms last year, following the country's economic growth. In 2016, increasing wage costs ranked fourth among the top five business challenges by order of significance.
About half of the companies described the business outlook for their industries in Korea over the next two years as pessimistic in terms of labor costs.
"Providing a fair salary for labor is a good thing, but it might be difficult for some industries to maintain the number of employees," ECCK President Christoph Heider said. "An evolutionary increase in the minimum wage would be the preferred way."
Asked about the youth employment quota for the creation of additional jobs, 48 percent of respondents said this will not facilitate job creation. Also, 58 percent of companies regarded converting irregular workers to regular ones as an unfeasible approach and a hindrance to job growth.
"Switching irregular workers to regular workers can be a factor of change in a company's business model," said Barbara Zollmann, the president and CEO of the Korean-German Chamber of Commerce and Industry.
The labor-friendly Moon government's other economic policies also caused concern for 45 percent of respondents who said the measures will end up harming the country's competitiveness.
The survey indicated that 63 percent of European company executives feel the government discriminates against foreign-invested firms here, although the country is still on the European Union's (EU) gray list of tax havens.
Heider defined that issue as something between the EU and the government, not a matter for the chamber.
Despite the concerns, Korea still remains an important market for European companies, given that 44 percent of respondents saw an increasing importance of the country in their company's overall global strategy and 47 percent characterized the country as having the same level of importance as before.
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