"If Minimum Wage Reaches 10,000 Won, 560,000 Jobs Will Disappear... It Should Be Frozen"

Korea Federation of SMEs 'Impact of Minimum Wage on SME Jobs' Forum
Kim Moon-sik, Chair of Minimum Wage Special Committee, "Decisions Must Consider Industrial Sites"
SME Industry Faces Manufacturing Labor Shortage... Appeals for Differential Application by Sector and Size

[Asia Economy Reporter Kim Bo-kyung] An analysis revealed that if the minimum wage rises to 10,000 won next year, more than 560,000 jobs will be lost and the real gross domestic product (GDP) will decrease by 72 trillion won. The small and medium-sized enterprise (SME) sector voiced concerns over the labor cost burden caused by the minimum wage increase and advocated for differentiated application by industry and company size.

The Korea Federation of SMEs held a forum on the 2nd at the Federation's headquarters in Yeouido, Seoul, under the theme "The Impact of Minimum Wage on SME Jobs." This forum was hosted by the Minimum Wage Special Committee, which was formed last April.

Kim Moon-sik, chairman of the Minimum Wage Special Committee at the Federation of SMEs, stated, "The minimum wage should no longer be a battle over the rate of increase but should be decided by considering the actual industrial sites affected by the minimum wage."

He added, "Many have already been pushed out of jobs due to COVID-19," and "Since the speed of recovery from the COVID-19 impact is showing polarization, the minimum wage increase requires very deep consideration."

At the forum, the voices from the field were heard mainly based on the results of "Analysis of Major Economic and Employment Indicators Related to Minimum Wage," presented by Kim Jae-hyun, research director at Fighterchi Institute. Kim Jae-hyun covered ▲ analysis of business conditions and employment indicators in micro-industries during 2018-2019 ▲ income distribution status at that time ▲ the impact on jobs and economic growth if the minimum wage increases next year.

Additionally, it was estimated that if the minimum wage rises to 9,000 won next year, 134,000 jobs will be lost and the real GDP will decrease by 16.9 trillion won. If the minimum wage increases to 10,000 won, 563,000 jobs will be lost, and the real GDP is expected to decrease by 72.3 trillion won.

He stated, "Due to the sharp minimum wage increase in 2018, self-employed individuals became more strained, and as a result, the income of low-income groups actually decreased," adding, "Raising the minimum wage with the aim of reducing income disparity is not desirable."

He emphasized, "It is necessary to freeze next year's minimum wage to alleviate the difficulties of micro self-employed and small business owners, while focusing labor policy direction on recovering from the economic recession caused by COVID-19."

Professor Song Heon-jae of the University of Seoul, who participated as a discussant, said, "If there are differences in productivity expectations from workers depending on the industry and regional characteristics of the company, it is desirable to design the minimum wage flexibly reflecting this as much as possible from the perspective of maintaining employment."

Gu Hong-rim, director of Banwon Fashion Collar Business Cooperative, appealed, "With the minimum wage rising, the wage for working part-time at convenience stores in the city and working in uncomfortable manufacturing jobs in local industrial complexes is becoming the same, so the manpower shortage can only worsen."

Hong Seong-gil, policy director of the Korea Convenience Store Owners Association, said, "Including weekly holiday allowances, the hourly wage already exceeds 10,000 won, so only ultra-short-time workers will increase," and added, "It is necessary to apply differentiated minimum wages by industry and size considering productivity."