Preparing for backlash
Dec 28,2017
From Jan. 1, the legal hourly wage will go up from this year’s by 16.4
percent to 7,530 won ($7). The business community is struggling to accommodate
the biggest-ever annual jump in the wage floor. Gas stations have installed
self-serving pumps to reduce staff. Restaurants and small-sized workplaces have
cut part-time staff to a minimum. Due to a limited number of part-time workers,
employees will have to work even harder. The minimum wage increase, designed to
improve the lives of the low-income work force,
has instead made things more difficult.
Even the head of the Minimum Wage Commission, Eo Soo-bong, has questioned the
effectiveness of President Moon Jae-in’s campaign promise to push up hourly
wages to 10,000 won by 2020. “We must strive to narrow income inequalities. But
raising the minimum wage cannot be a panacea. There must be other supplementary
measures,” he said.
Many other experts also pointed out that minimum wage alone cannot solve
poverty. According to a study by the Korea Development Institute, only 30.5
percent of workers making minimum wage were
considered to be impoverished, earning less than half of the average salaried
income in 2013.
The government budgeted 3 trillion won next year to offset the shock employers
may feel. According to JoongAng Ilbo findings, some employers are planning to
cut their work force to less than 30 in
order to qualify for the monthly government benefit that allows them to receive
a subsidy of 130,000 won per head. The government subsidy, originally aimed at
helping workplaces with 30 or fewer employees, could end up killing jobs.
The Minimum Wage Commission decided to fix its guidelines to count in bonuses
and allowances as wage. This would
prevent benefits from unnecessarily going to large companies that reward
employees with regular bonuses to compensate for their low base salary. But the
revision will be of little help to the self-employed and small merchants that
cannot afford to pay bonuses.
The commission also delayed its decision to differentiate the minimum wage hike
rate for the business sector.
The Moon Jae-in administration, which vowed to increase jobs and help low wage
earners, could instead threaten their jobs and livelihoods. The government must
try to find a reasonable solution before the real damage is done.
JoongAng Ilbo, Dec. 27, Page 34
DISCUSSION
What would be good changes from minimum wage increases
What would be negative effect form minimum wage increases
Do you feel any changes from because of minimum wage increases? such as cost increases, service changes… in many diverse industries.
What would be the ideal minimum cost?
If minimum cost is increased enough, would you do part time job instead of finding a regular job?
Do you think regular worker and part-time job worker should deserve different with different wage?
“We must strive to narrow income inequalities. But raising the minimum wage cannot be a panacea. There must be other supplementary measures,”
What would be helpful to reduce poverty instead of increasing minimum wage?
Please share If you have any suggestion or experience in other countries.