Fix the confusionPark Yong-man, chairman of the Korea Chamber of Commerce and Industry, pleaded to the leaders of ruling and opposition parties to make amendments to the proposed 16.4 percent hike in the minimum wage next year. He argued that the business community would suffer if the wage hike is implemented without discretion.
In a letter of “recommendations from experts on current economic issues” which he handed out to lawmakers, he said the business community understood the purpose of the increases in the wage floor, which is to help the livelihood of low-income workers. But he also pointed to the unreasonableness of the uniform hike as it could also end up benefiting employees of large companies earning 40 million won ($36,815) a year.
The Korea Employers’ Federation — publicly scorned by President Moon Jae-in for its protest of the government’s policy aimed at putting every irregular worker in a full-time position — also raised its voice. Its vice chairman, Kim Young-bae, warned that there would be grave ramifications across the industry if there is a uniform double-digit hike in minimum wage.
The government and legislature must listen to the concerns of the business community. They are not making pleas merely out of their own interests. If the base wage structure is not realistically adjusted to consider bonuses, salary in kind or welfare benefits as part of the monthly pay, some employees at large companies could qualify for the benefit as they are mostly compensated with bonuses.
Raising the minimum wage should help the lives of workers who live off hourly payment. All compensation should be included in the base wage. In France and Britain, even tips collected from customers are counted as basic wage, not to mention allowances and lodging costs.
The Moon Jae-in administration aims to raise the minimum wage pay base to 10,000 won over the next five years to promote economic growth through wage increases. Moon’s campaign promise was popular with voters. But campaign promises should be amended if there are unwanted side effects.
At a seminar sponsored by Sogang University, the school’s economists warned of weakening corporate competitiveness because of higher labor costs when wages are artificially inflated in a small-scale open economy like Korea’s. Companies could translate the higher labor cost onto consumers or reduce hiring to save their production costs. Some also would have to shut down or take their business overseas.
We cannot expect good results if policies are enforced even when their side effects are evident. Scholarly experiments must be fine-tuned by veteran bureaucrats. A person is not fit to serve public service if he pursues half-backed policy solely to please his boss.
JoongAng Ilbo, Nov. 25, Page 30