Printer Friendly

Higher minimum wage prompts firms to cut jobs.

The minimum wage hike this year is causing side effects on the nation's job market.

Honoring his presidential election pledge to raise the minimum wage to 10,000 won ($9.35) by 2020, President Moon Jae-in has exercised his influence with the Minimum Wage Commission since taking office last year. Last July, the commission concluded the 2018 minimum wage is set at 7,530 won per hour, up 16.4 percent from last year's 6,470 won. It was the largest hike in history.

The Moon administration's efforts are based on its policy stance to lessen the nation's economic dependence on exports while raising household incomes through higher salaries and more quality jobs, but the results seem to fall short of the government's expectations.

Instead, business owners are downsizing their workforce to reduce labor costs while people are experiencing difficulties getting jobs.

"My store runs in three shifts. I used to hire two shifts. Now, my wife and I are running it in the morning and afternoon shifts. We've decided to hire just one part-time worker only for the night shift starting this year," a convenience store owner surnamed Paik said.

"We can't afford hiring two part-timers anymore. There is no point running a convenience store if we consider this year's minimum wage. I heard a number of other convenience store owners have decided not to open their stores at night. I believe the wage hike is hurting not only business owners like us but also jobseekers."

According to Albamon, the nation's largest part-timer recruiting website, the total number of job opening posts has declined for the first time in five years.

It also conducted a survey of 1,458 employees and jobseekers over their job security, and 72 percent of them said they are worried about possible layoffs while experiencing difficulties finding a job.

A number of small-size businesses are also replacing their workers with machines to cut their payrolls.

"We don't need many workers in our branch since we installed automated order machines last year," said Kim, who manages a Burger King in Cheongdam, southern Seoul.

"I understand lease costs are prohibitively high in this neighborhood. Automated machines like these will replace not only floor but also cooking employees sooner or later."

Due to the minimum wage hike, a number of restaurants and stores in downtown Seoul announced their decision to raise the prices of their foods and products by 5 percent or 10 percent as of Jan. 1.

Labor advocates of the Minimum Wage Commission had initially requested a 55 percent hike for this year while business representatives suggested just 2.4 percent.

Korea's businesses have strongly opposed the 16.4 percent increase. The Korea Federation of SMEs said the rise should be below 5 percent, and 55 percent of them might be led to bankruptcy if the minimum wage jumps to 10,000 won over the next three years.

COPYRIGHT 2018 Asianet-Pakistan
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2018 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:The Korea Times News (Seoul, Korea)
Date:Jan 10, 2018
Previous Article:Korean Air passengers to use 2nd terminal at Incheon Airport.
Next Article:South Korea's 14 'super-rich' rake in more than $930,000 a month.

Terms of use | Privacy policy | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters