SEJONG -- A team from the International Monetary Fund on Monday expressed concerns over the pace of minimum wage hikes in South Korea, the Ministry of Economy and Finance said.
The delegation led by Tarhan Feyzioglu, Korea mission chief at the IMF, shared the concerns in a meeting with Finance Minister Hong Nam-ki as part of its annual meeting with South Korean policymakers.
In 2017, the minimum wage spiked 16.4 percent on-year to 7,530 won ($6.60) per hour in the biggest hike in nearly two decades.
It again soared 10.9 percent to 8,350 won at the beginning of this year. President Moon Jae-in is seeking to raise the minimum wage to 10,000 won by 2020, a key election pledge.
The rapid hike has sparked a strong backlash from businesses, especially small and self-employed shop owners, who have complained of ballooning labor costs.
Hong said South Korea will strengthen “flexicurity” and pursue active labor market policies and increase participation in the labor market by women, noting that South Korea understands the IMF’s concerns in regard to the minimum wage hikes.
Flexicurity is a term coined in Denmark that combines flexibility with security in dealing with job market and unemployment benefits.
The IMF team then gave high marks for the country’s “strong fundamentals,” citing low public debts, a strong manufacturing base and ample foreign exchange reserves.
South Korea’s foreign exchange reserves hit a record high of $405.51 billion as of end-January.
Still, Asia’s fourth-largest economy should improve growth potential and implement aggressive fiscal and monetary policies to deal with internal and external risks, according to the ministry.
Feyzioglu is set to carry out a briefing in Seoul on Tuesday after wrapping up the official visit to South Korea.
In December, South Korea said its economy could grow around 2.6-2.7 percent in 2019 amid a slowing global economy and US-China trade disputes.
Last week, the Organization for Economic Cooperation and Development slashed its growth outlook for South Korea’s economy this year to 2.6 percent amid a slowdown in global trade. (Yonhap)