Oblivious to the side effects

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Oblivious to the side effects

The Minimum Wage Commission failed to reach an agreement on revising the scope of a basic wage. The related parties could not narrow differences over the issue of counting allowances and bonuses as wages in order to slow the annual spike in the minimum wage. As voluntary negotiation broke down, the decision is now up to the government and legislature.

Confusion in the market and business inevitably will continue. Prices are rising. Higher menu prices have spread from fast-food chains to other diners. Prices of food on convenient store shelves such as cola, ready-made rice, frozen dumplings, and sandwiches have all gone up. Bottled water, public bathhouse fees, and car-cleaning charges are also higher, each citing increased labor costs. Subway and cab fares are poised to go up as well.

President Moon Jae-in remains oblivious to the side effects and optimistic about the positive outcome. “Over 1 million have applied for government subsidies for small employers to ease their burden from this year’s spike in the minimum wage. Their benefit is a meaningful achievement from the government’s higher minimum wage program,” Moon said recently.

But data shows otherwise. According to January job data, as many as 94,000 contract workers lost their job. And another 69,000 were laid off from precarious work. The most insecure and underprivileged people were first to lose their jobs after the wage floor went sharply up.

Deputy Prime Minister for Economy Kim Dong-yeon said the government could create a supplementary budget to create jobs for young people.

But this year’s budget is already at historic high of 429 trillion won ($401 billion), and 3 trillion won more is allocated to compensate employers for the steep increases in wages. Such makeshift actions won’t make the market instabilities from a wage hike go away. The wage scope should be revised for a lasting relief.

JoongAng Ilbo, Mar. 8, Page 30
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