OPINION

[Editorial] Adjustments needed

By Korea Herald

After relenting on 10,000 won minimum wage, Moon needs to reconsider other election pledges too 

  • Published : Jul 16, 2019 - 17:07
  • Updated : Jul 16, 2019 - 17:07

President Moon Jae-in should not feel too sorry for failing to keep his election pledge to increase the minimum wage to 10,000 won ($8.47) per hour within the first three years of his five-year term.

Moon offered a public apology through his chief of staff for policy on Sunday, two days after the Minimum Wage Commission decided to raise the wage floor by 2.9 percent to 8,590 won for next year.

If the hourly minimum wage had been bumped up to 10,000 won for 2020 as Moon promised during his campaign in 2017, when the wage floor stood at 6,470 won, the rate of increase would have been close to 20 percent. It was already in double digits for both 2018 and 2019.

This steep increase has had the unintended consequence of driving mostly low-wage workers out of their jobs, as employers -- especially owners of small businesses such as restaurants, cafes and shops -- have cut payrolls to cope with higher personnel expenses. As a result, income inequality in the country has only widened over the past two years.

The negative effects of excessive minimum wage hikes recently led Moon to go back on his campaign pledge amid worsening employment conditions and economic woes.

Government-appointed members of the tripartite wage commission sided with representatives of business and voted for the increase of less than 3 percent, despite tougher demands from the labor community.

Quoting Moon, his top policy aide said the commission had made a difficult decision in consideration of economic conditions, employment statistics and market receptiveness but that, as president, Moon was sorry for failing to keep his “promise to the people.”

However, with the exception of some intransigent labor and civic group activists, the people appear to think it is rather fortunate that Moon has given up on a campaign pledge that was at odds with reality.

Most employers wanted the minimum wage to be cut or frozen next year. Even many low-paid workers, who were supposed to benefit from higher minimum wages, favored a freeze out of concern that the job market could tighten further.

It is too dogmatic to insist on carrying out all one’s election pledges in spite of such circumstances. A more responsible attitude is to make the proper adjustments when there is a deepening discrepancy between those promises and actual conditions.

By slowing the pace of the minimum wage increase, Moon invited grievances from his political support base, but it was certainly the right thing to do given the present employment and economic conditions.

It is also necessary to consider applying differentiated minimum wages by region, industrial sector and company size to lessen the burden on employers and stabilize the job market.

Moon’s promise to raise the minimum wage is not the only inadvisable campaign pledge he made. Others also need to be revisited in order to avoid further confusion and inefficiency.

His promise to make all temporary jobs in the public sector permanent has proved just as unrealistic. His push to phase out nuclear power is likely to lead to an increase in electricity prices, and the reckless installation of solar panels and wind turbines is causing environmental damage around the country.

What is most urgent is a solution to ensure that the shorter maximum workweek regulations will be implemented in a more flexible way.

The rule cutting the maximum weekly working hours from 68 to 52 was put into practice this year without giving due consideration to corporate demand for more flexibility in its implementation.

It is deplorable that research and development institutes in the country are compelled to turn off their lights early in the evening to abide by the rule amid intensifying global competition in hi-tech sectors.

Regrettably, Moon and his aides do not yet seem ready to make a fundamental policy shift.

Kim Sang-jo, the presidential chief of staff for policy, said the government was not abandoning its income-led growth initiative, which has been criticized for increasing the burden on companies without raising income for less-privileged households.

In the spirit of income-led growth, Moon last week instructed Economy and Finance Minister Hong Nam-ki to make up for the modest minimum wage hike with other employment and welfare programs. Adherence to this ill-conceived policy, requiring further expenditure by the government, could have a broad range of negative repercussions on the economy, even more so than the steep minimum wage hike.

Before it is too late, the Moon administration should discard its dysfunctional policy and reconsider many of its other election pledges.