Preparing for backlash

From Jan. 1, the legal hourly wage will go up from this year’s by 16.4 percent to 7,530 won ($7). The business community is struggling to accommodate the biggest-ever annual jump in the wage floor. Gas stations have installed self-serving pumps to reduce staff. Restaurants and small-sized workplaces have cut part-time staff to a minimum. Due to a limited number of part-time workers, employees will have to work even harder. The minimum wage increase, designed to improve the lives of the low-income work force, has instead made things more difficult.

Even the head of the Minimum Wage Commission, Eo Soo-bong, has questioned the effectiveness of President Moon Jae-in’s campaign promise to push up hourly wages to 10,000 won by 2020. “We must strive to narrow income inequalities. But raising the minimum wage cannot be a panacea. There must be other supplementary measures,” he said.

Many other experts also pointed out that minimum wage alone cannot solve poverty. According to a study by the Korea Development Institute, only 30.5 percent of workers making minimum wage were considered to be impoverished, earning less than half of the average salaried income in 2013.

The government budgeted 3 trillion won next year to offset the shock employers may feel. According to JoongAng Ilbo findings, some employers are planning to cut their work force to less than 30 in order to qualify for the monthly government benefit that allows them to receive a subsidy of 130,000 won per head. The government subsidy, originally aimed at helping workplaces with 30 or fewer employees, could end up killing jobs.

The Minimum Wage Commission decided to fix its guidelines to count in bonuses and allowances as wage. This would prevent benefits from unnecessarily going to large companies that reward employees with regular bonuses to compensate for their low base salary. But the revision will be of little help to the self-employed and small merchants that cannot afford to pay bonuses.

The commission also delayed its decision to differentiate the minimum wage hike rate for the business sector.

The Moon Jae-in administration, which vowed to increase jobs and help low wage earners, could instead threaten their jobs and livelihoods. The government must try to find a reasonable solution before the real damage is done.

JoongAng Ilbo, Dec. 27, Page 34