June 05, 2018 09:22
The Korea Development Institute has warned that rapid increases in the minimum wage in 2019 and 2020 could result in massive job losses.
The state-run think tank in a report on Monday projected that a 15 percent wage increase over the next two years could potentially lead to the loss of nearly 100,000 jobs in 2019 and 140,000 the following year.
The institute highlighted similar difficulties in France, which stopped raising its minimum wage in 2005 once it had reached 60 percent of the median wage because higher pay made it harder for low-wage earners to find employment.
Korea's minimum wage in 2018 is already at 55 percent of the median.
The report conceded that its estimates are largely based on the case of another country, Hungary, where the wages were increased by 60 percent between 2000 and 2004. It also said it did not factor in government support for small businesses, which are hit hardest by higher minimum wages.
The KDI's report comes after Cheong Wa Dae claimed the effects of the minimum wage hike were "90 percent positive." But the top has come under fire for having made that calculation based on individual income rather than household income, and for excluding figures for the unemployed and self-employed.
The KDI stressed that the minimum wage increase has so far had few side effects but warned that the government should monitor its effects closely over the coming years.
- Copyright © Chosunilbo & Chosun.com