"What's the Use of Raising the Minimum Wage When Business Is Not Doing Well?"

Officials from the Korea Convenience Store Owners Association held a press conference urging a reduction in the minimum wage on the 2nd at the Korea Federation of SMEs in Yeongdeungpo-gu, Seoul.
[Photo by Kim Hyun-min, Asia Economy]

[Asia Economy Reporter Kim Jong-hwa] "It's so, so difficult. Now is not the time to raise the minimum wage. Due to COVID-19, sales are less than half. What good does raising the minimum wage do when business is not going well?"

This is the complaint of Kim Hyung-soon, head of the Seoul Jung-gu branch of the Korea Federation of Small and Medium Business. Kim expressed frustration, saying, "The minimum wage should have at least been frozen, but it was raised again. It has become difficult for self-employed business owners to survive."

The Minimum Wage Commission, a social dialogue body that deliberates and decides on the minimum wage, held its 9th plenary meeting on the 14th at the Government Sejong Complex and approved next year's minimum wage at 8,720 won per hour. This is an increase of 130 won (1.5%) from this year's minimum wage (8,590 won).

Reflecting the severe economic downturn caused by the novel coronavirus disease (COVID-19), the minimum wage increase rate is lower than the 2.7% during the 1998 International Monetary Fund (IMF) financial crisis, but even this is difficult for small business owners and the self-employed to accept.

The Korea Convenience Store Owners Association also issued a press release on the same day, stating, "Small-scale self-employed business owners, including convenience stores, have been closing down in succession due to the rapid minimum wage increases and the impact of COVID-19. Therefore, the Korea Convenience Store Owners Association earnestly urges a reduction in the minimum wage," and added, "We cannot accept the minimum wage decision that does not consider the reality faced by small-scale self-employed business owners, including convenience stores."

The association continued, "The steep minimum wage increase, combined with COVID-19, is pushing self-employed business owners who are already on the brink over the edge," and argued, "Wrong wage policies are tightening the noose on small-scale self-employed business owners year after year."

Choi Hyung-jin (54), a self-employed business owner in Myeongdong, said, "The situation is serious. Every day, more places in Myeongdong are closing. Self-employed business owners are having a very, very hard time," adding, "Honestly, it's hard enough to pay the wages of current employees, so thinking about additional hiring is out of the question. There is no room to think about the minimum wage."

Jung Jin-man (47), who runs a convenience store, said, "I have already let go of part-time workers, reduced business hours, and barely managed alone, but now I have reached my limit," and expressed frustration, saying, "The minimum wage increase is something only people who don't understand reality would talk about. Does it make sense to raise the minimum wage now?"