Business groups fight change to wage system

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Business groups fight change to wage system

Local business groups and trade organizations came together on Tuesday to submit a formal protest against the government’s new proposed method of calculating minimum wage, claiming it will force businesses to pay workers more than they deserve.

The collective action came after the Ministry of Employment and Labor announced on Aug. 10 that it was planning to revise the Enforcement Decree of the Minimum Wage Act so that hourly income is calculated by dividing the amount earned in a week by the number of hours worked plus the number of holiday hours.

Under current labor legislation, employees are guaranteed one day off a week, which technically counts as eight hours of holiday. Including the eight extra hours in the wage calculation effectively means that final figure comes out much lower. Employees who have worked 40 hours in a week will effectively have to be paid the minimum wage for 48 hours.

With the revision, a person who receives 10,000 won ($8.90) per hour in a 40-hour week would be regarded as receiving less than minimum wage from next year, even though the minimum hourly wage for 2019 has been set for 8,350 won.

This is because if the employee receives 400,000 won a month, the hourly rate after dividing the pay into 48 will only come down to 8,333 won. The employer would have to pay at least 400,800 won a week, or 10,020 won per hour, to comply with the new rules.

The lobbying groups called the proposed changes unreasonable and demanded the government keep existing regulations.

“Employees don’t offer any form of labor during holidays,” the trade associations said in their report. “It is only logical that the weekly holiday hours are not considered in minimum wage calculations.”

“We believe that the least the government can do to relieve the financial burden of small business owners is maintain the enforcement decree as it is,” the group added. “We believe that these changes in calculations are a matter to be debated in the National Assembly. We ask the government’s active support for businesses in light of the economic challenges.”

The collective action included the Korea Employers Federation, Korea Chamber of Commerce and Industry, Korea International Trade Association and the Korea Federation of SMEs, among others.

The protest follows an earlier complaint on Sunday by the Korea Economic Research Institute which also called for the government to keep the existing legislation.

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