Ministry pins hopes on minimum wage hikeKorea’s increase of the minimum wage will boost private spending, which in turn can help Asia’s fourth-largest economy break from its low growth trend, a senior government official said Friday.
Last July, the country decided to raise its minimum wage by 16 percent to 7,530 won ($7.08) for 2018, the biggest jump in about two decades.
Although a higher minimum wage is one of the government’s strategies to boost private consumption and narrow the income gap, small and medium-sized businesses expressed concerns about higher labor costs.
The government has earmarked 3 trillion won to reduce the burden on smaller firms that hire part-time workers.
“There are also concerns about rising inflation stemming from the minimum wage hike, but inflation is expected to remain at a manageable level,” Koh Hyeong-gwon, deputy finance minister, said in a meeting with senior officials from other ministries.
The minimum wage hike is the starting point for easing income polarization, and it could create a virtuous cycle of corporate investment and growth as well, he said.
The government is determined to further raise the minimum wage to at least 10,000 won by 2020.