"Even with family help, it's unbearable"…Self-employed upset over hourly wage increase to 11,200 won

Convenience Store Owners and Self-Employed Worried About Minimum Wage Increase
Forecast Predicts Closure of 100,000 Self-Employed Businesses

As the labor sector demands a minimum wage of 11,200 won during next year's minimum wage discussions, self-employed business owners are worried about threats to their survival. Small-scale businesses such as convenience stores and restaurants are coping with rising labor costs by mobilizing entire families. There are even talks that about 100,000 businesses could close down if this continues.

Jung Mo (40), who runs a convenience store in Daechi-dong, Gangnam-gu, Seoul, is organizing the items for sale.
[Photo by Shim Seong-a]

On the afternoon of the 10th, convenience store owner Jeong (40), whom we met in Daechi-dong, Gangnam-gu, Seoul, said, "If the minimum wage is raised further next year, I think I will have to consider closing down. With the minimum wage plus the weekly holiday allowance, there is nothing left." He sighed, saying, "It's like saying let's all die together." Currently, Jeong works 8 to 12 hours a day at the convenience store, and since two years ago, his family members have been working together instead of part-time employees.

Other self-employed business owners are in similar situations. Kim (30), who runs a meat restaurant in Jamsil-dong, Songpa-gu, Seoul, lamented, "I don't know about other industries, but in restaurants, nothing from various fees to ingredient costs stays the same, and if the minimum wage rises as well, it becomes unmanageable."

Jo (38), who operates a hamburger shop in Nam-gu, Gwangju, fired all part-time workers six months ago. Jo said, "Unless sales increase noticeably, if the minimum wage goes up, it basically means taking from my own salary, so the annual increase in minimum wage causes a lot of stress," adding, "If it is difficult to differentiate by industry, I hope the minimum wage would just serve as the minimum wage."

There is also a claim that if the minimum wage is increased by 13.6% as the labor sector demands, 96,000 small businesses with four or fewer employees could close. The Fighterch Research Foundation explained, "An empirical analysis using data from 15 European countries from 2009 to 2020 showed that a 1% increase in the minimum wage raised the closure rate of companies with 1 to 4 employees by 0.77%. Applying the minimum wage increase level demanded by the labor sector, it is analyzed that 96,000 businesses would close."

Empty stores are located throughout the commercial area near Ewha Womans University in Seodaemun-gu, Seoul. Photo by Jinhyung Kang aymsdream@

Earlier, on the 9th, the management and labor sectors presented their initial minimum wage proposals and began negotiations at the 9th plenary meeting of the Minimum Wage Commission. The employer side demanded a freeze at 9,860 won, while the worker side proposed 12,600 won. On the same day, the first revised proposals were submitted, with 11,200 won and 9,870 won respectively. The labor sector argued that the minimum wage must be raised considering the ongoing high inflation and the decline in real wages of workers, which have made it difficult for low-wage workers to make a living. On the other hand, the management side countered that the payment capacity of small and micro enterprises and small business owners must be taken into account.

Professor Ha Jun-kyung of the Department of Economics at Hanyang University said, "If the minimum wage rises significantly, restructuring in the self-employed sector will accelerate. The impact of the minimum wage increase on the market should be objectively confirmed through indicators such as the median income ratio in the wage distribution or the number of workers who did not receive last year's minimum wage, and an appropriate level should be found." He added, "If restructuring accelerates, various variables such as whether the government has measures to respond to this should also be considered."