SEOUL – South Korea’s corporate lobbies expressed concern Sunday over an agreement reached on Saturday, to increase the minimum wage by 16.4 percent – the biggest rise in nearly two decades – fearing it may damage small and medium-sized businesses.
A joint committee comprising the Minimum Wage Commission, a trilateral council of representatives from labor, management and the general public, held its 11th plenary meeting on Saturday and approved the increase in the minimum wage per hour to 7,530 won ($6.66) by 2018, a rise of 16.4 percent from the rate in 2017, which already witnessed an increase of 7 percent from a year ago.
“It was a decision that ignored small and mid-sized businesses which are already suffering from harsh economic conditions,” said the Korea Employers Federation (KEF).
“While there is social consensus for the need to increase the minimum wage, if it rises too fast, the burden mainly falls on small business owners and could eventually lead to a reduction in new jobs,” an official at the Korea Chamber of Commerce and Industry told the news agency Yonhap.
The increase for 2018 is the largest since 2000 when it rose by 16.6 percent.
South Korea’s Finance Minister Kim Dong-yeon said Sunday that the government will swiftly design measures to relieve small and medium-sized businesses of the burden from a raise of the minimum wage for next year, while he also stressed that it is necessary to increase household incomes.
South Korean President Moon Jae-in, who assumed office in May, has promised to increase the minimum wage up to 10,000 won per hour before his five-year term concludes in May 2022.
The decision of the joint committee comes at a time when trade union workers of the two major South Korean vehicle manufacturers, Hyundai Motor and its subsidiary Kia Motors – the most influential trade unions in the country – have threatened to strike if negotiations related to wages fail.