Business groups decry minimum wage hikes

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Business groups decry minimum wage hikes

Six business lobbying groups said Monday that businesses should be allowed to set minimum wages for next year at a reasonable level after considering various economic circumstances.

Leaders of the Korea Federation of SMEs, the Korea Employers Federation, the Korea Chamber of Commerce and Industry, the Federation of Korean Industries, the Korea International Trade Association, and the Association of High Potential Enterprises of Korea organized an emergency press conference on Monday at the Korea Federation of SMEs’ headquarters in western Seoul.

This was the first time in two years that the six organizations made a joint statement for the press.

The statement was spurred by labor unions’ recent demand that the minimum wage next year should go up to 10,079 won ($9) per hour, a 43 percent rise from this year. This year, the minimum wage was raised to 7,530 won from 6,470 won, a 16.4 percent rise.

Negotiations over next year’s minimum wage are under way but the business and labor communities have very different views, the business groups explained.

“Minimum wages for next year should be decided on a reasonable level, in consideration of various economic circumstances,” said Shin Young-sun, vice chairman of the federation representing SMEs. “Due to the recent steep rise in the minimum wage, Korea’s minimum wage compared to per-capita gross national income has been ranked the fourth-highest in the OECD member states.”

Almost one out of four workers in Korea are affected by changes to the minimum wage, an abnormal labor structure according to the business groups.

A hike in the minimum wage affects not only the cost of labor but eventually the cost of raw materials and wholesale prices, which means double and triple burdens for businesses, the groups said. If the minimum wage is increased again next year, smaller businesses may be forced to shut down, they continued.

“Having to pay the cost of increased social conflict whenever the country sets minimum wages is not desirable,” Shin added.

The six business groups stressed that changes to the minimum wage should be applied differently according to industries and business sizes, mainly because those most hurt are smaller, low-income businesses.

“Excessive rises in the minimum wage without consideration of the unique characteristics of different industries means logistics business operators like us have to choose between giving up a business and becoming law violators,” said a representative from a cooperative foundation for logistics companies.

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