Who benefits from wage hikes?

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Who benefits from wage hikes?

The minimum wage hike vexes employees as much as employers, according to a report by members of the Minimum Wage Commission after they toured industrial and business sites. The report said bakery shop owners sacked bakers and learned how to bake themselves after the minimum hourly wage was raised 16.4 percent from 2016 at the beginning of this year.

Workers complained their paychecks have not gotten any better because overtime was reduced after the government enforced a 52-hour workweek. Job seekers said new openings became scarcer after the wage hike. Employees fear another wave of streamlining if the minimum wage goes up by double digits again next year. The minimum wage increased sharply with the goal of making the hourly base 10,000 won ($9) within three years to achieve the income-led growth goal pushed by the Moon Jae-in administration. But the survey found the results have been the opposite — jobs have been reduced and people’s livelihoods have not gotten any better.

The data has reflected our reality accurately. The income of the bottom 20-percent income bracket fell 8 percent in the first quarter against one year ago. In its latest report on the Korean economy, the Organization for Economic Cooperation and Development found a correlation in the deterioration in jobs in the food, distribution, and wholesale/retail areas with the hike in minimum wage.

The commission must set the guidelines on the minimum wage level for next year by Saturday. The labor side demands 10,790 won for next year, which would be a 43.3 percent increase from this year’s 7,530 won. The raise is preposterous even for bargaining purposes. Even when counting in regular bonuses as base wage, it is a whopping 32.6 percent increase against this year’s level.

The government withholds any negative review on higher minimum wage, claiming more time should be given to judge its lasting impact. The business sector is already engulfed with wage scare. The government must moderate the pace. It must not stop pressing ahead with the agenda by turning a blind eye to the casualties.

JoongAng Ilbo, July 10, Page 30
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