SKorea’s mininum wage hike disappoints business groups
- Min wages to rise 10.9pc to 8,350 ($6.70) won an hour
Jul 15, 2018-South Korea’s business groups and the country’s umbrella labour union expressed disappointment after the government said on Saturday it would raise minimum wages by 10.9 percent for 2019.
The Minimum Wage Commission announced that minimum wages would be raised to 8,350 won ($7.40) an hour next year, lower than what workers had proposed.
Businesses also criticised the move as they had sought to freeze salaries amid signs of growing economic headwinds and the fallout from US trade protectionism.
A group representing small business owners said it won’t implement the reform as its members were already grappling with higher minimum wages.
South Korea’s labour-friendly President Moon Jae-in has pledged to raise the minimum wage by 55 percent to 10,000 won per hour by 2020 as part of efforts to boost consumption and growth.
After a 19-hour-long meeting ending on Saturday, the wage commission agreed on the hike, which was smaller than this year’s 16.4 percent 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.
The group of 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 a crossroads where they cannot help but choose either business shutdowns or staff cuts,” the association said, adding that they were facing a “miserable reality.”
It said its members would discuss the possibility of more action.
The Minimum Wage Commission said it would submit to the government proposals to support small merchants facing difficulties.
“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,” Ryu Jang-soo, chairman of the commission, said in a statement.
South Korea’s umbrella labour union slammed the smaller-than-expected rise which it said confirms that Moon “has discarded” his election pledge to raise the minimum wage to 10,000 won.
“This is something we have been worried about, but after seeing the result, we feel miserable,” the Korean Confederation of Trade Unions said.
South Korea’s export growth came to a halt in June and the government has warned that an escalating US-China trade dispute could hit its exports of “intermediate goods.”
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”.
Moon, who was elected last year, had made job creation a priority.
Published: 15-07-2018 07:55