SMEs call for gradual rollout of labor reforms

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SMEs call for gradual rollout of labor reforms

Lobbying groups representing small and medium-sized businesses expressed concerns about the government’s push to raise the minimum wage and reduce work hours during their first meeting with President Moon Jae-in’s de facto transition team on Thursday.

The meeting with the president’s advisory committee on state affairs planning, set up after Moon was voted president in a snap election last month, occurred in the midst of growing tension between the government and businesses over his administration’s progressive policy proposals. Moon wants to raise the minimum wage from 6,470 won ($5.75) per hour to 10,000 won by 2020 and reduce the number of hours in a work week from 68 to 52.

The government believes this will improve the work environment for many young people, especially those working part-time jobs, contribute to more hiring and create a stable economy based on income improvement. Smaller companies have warned that such changes will burden the overall economy and drive companies to the ground. The Korea Federation of SMEs estimates that raising the minimum wage by 2020 will amount to a cost burden of 81.5 trillion won every year after that.

During the meeting, which took place at the federation’s offices in Yeouido, western Seoul, Park Sung-taek, chairman of the lobbying group, asked the government to “open its ears” and listen to the concerns of small businesses before pushing forward with its reforms.

He requested the administration try to minimize consequences by adopting changes gradually.

The head of another lobbying group agreed.

“Raising the minimum wage to 10,000 won by 2020 is a sharp rise that does not reflect the realities of the labor market,” said Kim Moon-sik, chairman of the Korea Oil Station Association, which represents the country’s independent gas station owners.

Kim said the issue should be discussed among companies, the government and labor to gradually raise the minimum wage while factoring in other payments including bonuses and meal payments.

On work hour reduction, Park Sun-hwang, head of the Korea Society of Die and Mold Engineering, proposed extending the timetable of implementation for companies with 300 or fewer employees so that they can prepare for the changes and resolve the issue of small workforce.

In a separate meeting on Thursday, Park Yong-maan, chairman of the Korea Chamber of Commerce and Industry, which represents conglomerates, relayed similar concerns to Moon’s advisory committee.

“In the bigger picture, it is too early,” Park said in his first meeting with the transition team on the subject of raising the minimum wage and reducing work hours.

Korea Inc. has been vocal about the Moon administration’s policy proposals. Last month, Kim Young-bae, vice chairman of the Korea Employers Federation, said the government’s efforts to raise the minimum wage and convert temporary workers to permanent ones would only “deepen conflict.”

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