South Koreans worry over higher minimum wage

By Jennie Oh
South Koreans worry over higher minimum wage
Minimum wage in South Korea was raised by 16.4% to $7 an hour on Monday. File Photo Courtesy of EPA/Yonhap News

SEOUL, South Korea, Jan. 2 (UPI) -- 27 year-old Han, a part-time shop assistant in central Seoul, has mixed emotions about the minimum wage hike initiated in the wake of the New Year.

The hourly wage floor was raised by 16.4 percent to $7 an hour, representing the biggest annual increase in 17 years.


"It's good that I'm getting paid more but I don't know. I don't know how long this will last," Han told UPI.

The wage hike means Han would receive an additional $190 a month, based on her nine hour shifts from Monday through Friday.

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However, like most workers on minimum wage, Han worries her employer will decide to cut back hours or even the number of part-time staff to make up for the extra hourly payouts.

A majority of small-and-medium businesses believe they will struggle to accommodate the bigger payroll, raising concerns about job stability.

Out of 304 small business owners surveyed by job portal Albamon, nearly 80 percent said they would employ less part-time workers this year due to higher wages. Only 15 percent said they were unaffected by rate hike.

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"I've talked to my staff about it. I'll have to make cutbacks and let some of them go. There's no way around it. Sales figures just can't cover the additional wages," a 54 year-old convenience store owner surnamed Choi told UPI.


Choi plans to apply for government subsidies to cover extra wages and take over more of her workers' shifts.

The government allocated $2.8 billion from this year's budget to help small business owners pay up the increment in wages.

However, a number of experts say the scheme can only provide a quick fix shot in the arm, especially as the Moon administration plans on further raising the minimum wage to $9.40 an hour by the end of his five-year term.

"Subsidies could provide an immediate, short-term solution for small business owners but in a couple of years, they could lead to a larger burden of corporate tax while weakening corporate competence. In the long run, small businesses may not have the ability to afford the increments while taking a toll on public funds," Jung Jae Hoon, Professor of Social Welfare at Seoul Women's University told UPI.

In fact, data from Statistics Korea show that while the minimum wage grew nearly three-fold since 2002, more than 2.6 million workers were working below the minimum wage last year.

According to Jung, the government should rather direct efforts and resources to developing long-term solutions.

"The government needs to focus on enhancing SMEs' overall competence in the market by improving corporate structure and conditions across the private sector. By supporting the framework for businesses to grow, SMEs can build up the capacity to raise wages on their own," he said.


A survey released by DongA Ilbo on Tuesday showed that four in ten people believe the government should wait and see before deciding on further minimum wage hikes.

A third of the respondents said the rate should be raised while 22 percent opposed another increase as it could lead to the loss of jobs.

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