July 16, 2018 10:44
A government committee after an all-night tussle on Saturday decided to set next year's minimum wage hike at a whopping 10.9 percent, disappointing small businesses which had hoped for an easier ride. That will bring the minimum wage to W8,350 an hour (US$1=W1,133).
The committee agonized overnight at the government complex in Sejong city but still arrived at a figure that is vastly higher than businesses had hoped amid signs that the hike will cost jobs and sink small enterprises.
The increase translates into a monthly wage of W1.75 million based on 40 hours a week, up W171,380 a month. One in four workers in Korea will benefit from the hike, according to the committee, or five million people.
The increase is alarmingly rapid even in the eyes of many who are in favor of a gradual increase, jumping a whopping 29.1 percent or nearly one-third from W6,470 an hour in 2017 over just two years.
Last year 13.3 percent of workers or 2.66 million earned less than the legal minimum wage, and there are fears that the double-digit hike could force many more struggling small employers to violate the law as the economy sputters.
The Korea Federation of SMEs and other business lobbies are up in arms, denouncing the "unilateral" decision.
"The minimum wage increase did not consider the payment ability of small businesses," the federation said in a statement. "The additional increase... that does not entail alternative choices will only end up causing more jobs to be lost among vulnerable groups in society and widen the income gap."
Small business owners, who stand to be hit the hardest, plan to stage a protest in front of Cheong Wa Dae and boycott the hike.
Choi Seung-jae, head of the Korea Federation of Micro Enterprise, said, "There is practically no small business that can survive such a sharp hike in the minimum wage. The minimum wage hike is threatening small business owners and workers with unemployment."
But workers representatives are also dissatisfied, saying the hike is too small and at this rate President Moon Jae-in's campaign pledge of raising the minimum wage to W10,000 by 2020 is impossible.
- Copyright © Chosunilbo & Chosun.com