[Convenience Store Empire] Minimum Wage and Weekly Holiday Pay... 24-Hour Stores Turning Off the Lights

<16>The Frontline of Minimum Wage

Conflict Between Store Owners and Part-time Workers as Eul and Byeong
Sales per Store Remain Flat... Labor Costs Rise
Government Measures Require Headquarters to Share the Burden

Due to recent increases in labor costs and rent, more convenience stores are giving up late-night (midnight to 6 a.m.) operations. Currently, 2 out of every 10 stores have already stopped late-night operations. Amid ongoing conflicts between labor and management over next year's minimum wage decision, it is expected that more stores will cease late-night operations if the minimum wage exceeds 10,000 won.

CU hybrid store exterior. [Photo by BGF Retail]

◆Intense Competition, Closing Doors Due to Labor Costs

According to GS25 on the 13th, the proportion of stores not operating late at night was 14.7% in 2019, 16.4% in 2020, 19.2% in 2021, 20.2% last year, and 21.1% as of May this year. Hybrid stores increased from 9 in 2019 to 713 as of May this year, and fully unmanned stores rose from 7 to 87. In the case of CU, the proportion of stores not operating late at night is 16.3%, while Emart24 closes 80% of its stores at night.

The National Convenience Store Franchise Association stated, "Next year's minimum wage level should be reduced by more than 10%" and argued that "weekly holiday allowances should be abolished and minimum wages should be applied differently by region and industry." Convenience store owners complain that if the minimum wage demanded by the union reaches 12,000 won, including weekly holiday allowances, it would amount to 14,400 won per hour, and including employer burdens and severance pay, they would have to bear more than 17,000 won.

The convenience store industry is typically a 24-hour operation, making it highly sensitive to minimum wage increases. Recently, the enforcement decree calculating hourly wages including weekly holiday allowances has been implemented, increasing the burden further. For these reasons, convenience store owners have demanded differential application of minimum wages and abolition of weekly holiday allowances, but these demands have not been accepted so far. According to the industry, about 70% of convenience store operators are livelihood-type self-employed individuals.

Although annual sales per store have remained almost stagnant, labor costs have increased, continuously increasing the burden on convenience store owners. According to the Ministry of Trade, Industry and Energy, the average purchase price per person at convenience stores was 5,619 won as of April 2019, increasing by 20.1% to 6,754 won in April 2023. On the other hand, sales per store increased only by 2.2%, from 50.19 million won to 51.33 million won. This is the result of fierce competition among convenience stores and rising costs such as labor and rent.

◆Disclosure of Violations, Need for Headquarters-Store Owner Cooperation

The government has not been able to identify cases of minimum wage violations occurring in convenience stores. According to data on minimum wage violation cases received by Representative Lee Su-jin of the National Assembly's Environment and Labor Committee from the Ministry of Employment and Labor, there were 1,631 cases reported last year for violations of the Minimum Wage Act, and 1,897 cases were processed. By business size, businesses with fewer than 5 employees accounted for the most cases, with 917 reported (1,030 processed). These violations are presumed to frequently occur in small businesses such as convenience stores and restaurants, but the Ministry of Employment and Labor does not disclose specific information.

Convenience store headquarters maintain that they must comply with the legally mandated minimum wage, but they only inform store owners of the changed minimum wage. In fact, they show a passive attitude by not taking significant action regarding minimum wage law violations. As a result, many convenience stores frequently fail to pay part-time workers the minimum wage or split working hours to avoid paying weekly holiday allowances. The government needs to strengthen enforcement against minimum wage violations and simultaneously seek cooperative measures between headquarters and store owners.

Professor Lee Byung-hoon of Chung-Ang University's Department of Sociology stated, "Due to recent price increases, raising the minimum wage is inevitable. However, conflicts exist over the extent of the increase considering the payment capacity of self-employed and small business owners." He diagnosed, "In the case of convenience stores, since headquarters gain considerable profits and store owners have no choice but to control labor costs, conflicts intensify. It is necessary to establish a system that can guarantee minimum wages between headquarters and store owners."