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Ryu Jang-soo, chairman of the Minimum Wage Council. Photo: EPA

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

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.

Members of the Korean Confederation of Trade Unions calling for the minimum wage to be increased to 10,000 won (US$8.9) per hour on July 13, 2018. Photo: EPA

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”.

This article appeared in the South China Morning Post print edition as: Businesses to fight minimum wage rise