9 out of 10 SMEs Say "Minimum Wage Should Be Frozen at Least Next Year"

80.8% 'Freeze', 7.3% 'Cut'... Highest Level in 5 Years
Severe Economic Situation, Need to Avoid Exhaustive Debates and Reach Tripartite Agreement

According to a survey, 9 out of 10 small and medium-sized enterprises (SMEs) hope for "at least a freeze on next year's minimum wage." The Korea Federation of SMEs and the Korea Employers Federation conducted a ‘Survey on Employment Difficulties and Minimum Wage Opinions of SMEs Employing Minimum Wage Workers’ targeting 600 SMEs from the 6th to the 13th of last month, and announced on the 1st that 88.1% responded that “next year’s minimum wage should be frozen or lowered.”

Regarding the appropriate level of next year’s minimum wage, 80.8% answered ‘freeze’ and 7.3% answered ‘reduction,’ showing the highest level among surveys conducted in the past five years. As for how they would respond if next year’s minimum wage increases compared to this year, 44% said they would reduce new hires, and 14.8% said layoffs, indicating that more than half of the companies would respond by reducing employment.

The proportion of respondents who said their current business situation has ‘worsened’ compared to the previous year was 76.7%, 75.3% said their first-quarter performance deteriorated, and 65.7% forecast that the second quarter will also worsen. This appears to reflect the recent worsening business conditions. Regarding the timing when layoffs would be inevitable if the current situation continues, 33% responded ‘within 6 months’ and 45% ‘within 9 months,’ confirming that maintaining employment at the current wage level is extremely difficult.

Furthermore, more than half (56.5%) responded that it would take more than six months for business and employment conditions to recover even after the COVID-19 crisis ends. Lee Tae-hee, head of the Smart Jobs Division at the Korea Federation of SMEs, said, “SMEs are currently fighting for survival,” and added, “Given the very severe situation of our economy and employment levels, it is desirable for labor, management, and government to prioritize job preservation and agree to at least freeze next year’s minimum wage.”