] South Korea’s minimum wage per hour for next year has been set at 6,470 won ($5.70), a growth of 7.3 percent from the current 6,030 won. The new minimum wage translates to 1.35 million won per month for employees who work full time.
Opposition lawmakers expressed their regret over the decision. The main opposition said the increase should have been at least a two-digit percentage. The runner-up opposition claimed the increase is far short of the level that can narrow the current income gap and that the decision should not have been made without involving labor groups.
In contrast, the Korea Employers’ Federation said that the 7.3 percent raise will only increase the burden on smaller companies that face tough economic conditions. It said the raise would mean that workplaces with less than 30 employees in the country have to spend an additional 2.5 trillion won every year.
The push for a sharply higher minimum wage by labor groups and political parties appears to be influenced by a recent rush in developed countries to raise minimum wages.
In the U.S., New York and California states have decided to boost the minimum wage to $15 per hour by 2022, more than double the present federal minimum salary of $7.25. Similar moves are taking place in the U.K. and Japan.
It is true that Korea’s minimum wage level is not high compared to the 34 members of the Organization for Economic Cooperation and Development. However, it needs to be raised in a way that does not put too much of a financial burden on enterprises.
A sharp hike in the minimum hourly wage could result in job losses, as small businesses would have to cut their payrolls to reduce costs. In Korea, the proportion of workers susceptible to such cuts is quite high.