Gov’t earmarks subsidies for higher hourly pay
The ruling Democratic Party and government agreed Thursday to earmark 2.4 trillion won ($2.25 billion) for low-interest loans for small to medium sized companies to help them pay higher labor costs as a result of the hike in the minimum wage.
They also agreed to offer 250 billion won worth of emergency relief loans to micro enterprises struggling to adapt to the drastically increased hourly wage, which was hiked 16.4 percent to 7,530 won this year from 6,470 won, the largest increase in nearly two decades. Moon Jae-in promised in his presidential campaign to raise it to 10,000 won by 2020.
The DP and government also agreed to lower a cap on rent increases for business tenants by revising an enforcement ordinance on a law for protection of commercial building tenants. Currently, the yearly increases are capped at 9 percent. The government aims to drop the rate to 5 percent by revising the ordinance by the end of this month.
“The government and ruling party affirmed today our shared understanding that an increased minimum wage leads to increased incomes and consumption, contributing to economic growth in a virtuous cycle,” said Kim Tae-nyeon, head of the DP’s policy committee, in a press briefing after a joint meeting with senior government officials including Employment and Labor Minister Kim Young-joo and Hong Jong-haak, the minister of SMEs and Startups.
The measures rolled out Thursday are intended to address complaints from owners of small businesses about increased labor costs.
To help them adjust to the higher minimum wage, the government is giving a subsidy of 130,000 won per month to help businesses that employ fewer than 30 workers. Only businesses that pay up to 1.9 million won a month to workers are eligible for the subsidy. The government is also giving a 30-percent cut for companies with fewer than 30 employees on state-run employment insurance.
Moon believes the higher minimum wage was essential in improving people’s livelihoods, despite objections from the business community. He defined the wage increase as the “most important project” pushed by his administration this year during a meeting with representatives from small business associations on Tuesday.
BY KANG JIN-KYU [email@example.com]