Choo Kyung-ho: "Excessive Wage Increases Expand Labor Market Polarization... Should Be Restrained"

On the 28th, Deputy Prime Minister for Economy Choo Kyung-ho and Chairman Sohn Kyung-shik are walking towards the meeting room at the Korea Employers Federation in Mapo-gu. June 28, 2022. Photo by Yonhap News.

[Asia Economy Sejong=Reporter Son Seon-hee] Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho said on the 28th, "The chain reaction of competitive price and wage increases riding on the inflationary atmosphere causes a 'vicious cycle of price-wage spiral,' leading to difficulties throughout the economy and society," urging restraint on excessive wage hikes.

Deputy Prime Minister Choo made these remarks during a meeting with Chairman Son Kyung-sik of the Korea Employers Federation (KEF) and other chairpersons at the KEF conference room in Mapo-gu, Seoul, where he delivered opening remarks.

Choo pointed out, "Recently, a concerning trend of high wage increases has appeared mainly among some IT companies and large corporations, showing signs of spreading to other industries and companies. In particular, so-called successful, financially strong top-tier companies are competitively leading high wage increases under the pretext of performance rewards or talent acquisition." He added, "Excessive wage increases not only exacerbate the high inflation situation but also widen the wage gap between large corporations and small and medium-sized enterprises (SMEs), increasing the relative deprivation of SMEs and vulnerable workers, which could amplify social conflicts."

He also said, "Excessive wage increases beyond the productivity of large corporations will expand polarization in the labor market and deepen job mismatches across workplaces. Ultimately, companies will find it difficult to maintain competitiveness under such a high-wage, high-cost structure."

However, he noted, "Wages are fundamentally a matter to be autonomously decided between labor and management," but considering the current difficulties of our economy, he urged the business community to restrain excessive wage increases, raise wages to an appropriate level within the scope of productivity improvement, and strive to absorb various cost increases through productivity enhancements such as expanded investment whenever possible."