South Korea to raise minimum wage, but small business groups reject decision
Group representing small business owners called the increase a ‘unilateral decision’ and said it would impose a ‘moratorium’ on its implementation
South Korea on Saturday decided to raise the minimum wage by 10.9 per cent to 8,350 won (US$7.40) an hour next year but a small-business group said it would refuse to comply because its members were already grappling with a slowing economy.
South Korea’s labour-friendly President Moon Jae-in has pledged to raise the minimum wage by 55 per cent to 10,000 won per hour by 2020 as part of efforts to boost consumption and growth.
After a 19-hour-long meeting, the Minimum Wage Commission agreed on the increase, which was smaller than this year’s 16.4 per cent rise, amid worries about weak job growth.
South Korea added a monthly average of 142,000 jobs between January and June this year, the slowest growth seen since the 2008-09 global financial crisis, according to Statistics Korea.
A lobby group representing small business owners called the wage increase a “unilateral decision” and said it would impose a “moratorium” on its implementation.
“We can’t accept the decision by the Minimum Wage Commission,” the Korea Federation of Micro Enterprise said in a statement. “Small-business owners are at crossroads where they cannot help but choose either business shutdowns or staff cuts.”
The association said its members were facing a “miserable reality” and they would discuss the possibility of more action.
“We may not be able to satisfy both companies and workers, but after a heated debate, we proposed levels that can contribute to improving the income of low wage workers and alleviate an income cap, without hampering the economy and employment,” said Ryu Jang-soo, chairman of the commission.
He also said the commission would submit to the government proposals to support small merchants facing difficulties.
The Organisation for Economic Co-operation and Development said in a report in May that raising the minimum wage “could also slow employment growth and weaken Korea’s competitiveness if not accompanied by productivity gain”.