Wage calculation to be reformedThe government will devise a new system for arriving at minimum wage changes, and will announce initial findings next week and finalize the decision-making structure later this month.
During a macroeconomic ministers meeting held on Friday, Finance Minister Hong Nam-ki said that once the draft is made, public discussion will be held on the proposal. Expert opinions will be invited.
He said the plan will include the formation of two committees. One will be a committee of experts.
It will be tasked with arriving at a range for new minimum wage rates. The committee will also study the impact of minimum wage rises.
The second committee will actually make the decision on the following year’s minimum wage. Its membership will include small- and medium-sized enterprise owners, young job seekers, women and contract workers.
Currently, the minimum wage committee includes representatives from the government, labor unions and business management.
It has 27 members with nine representatives from each group.
“Next week, the labor minister will announce the draft on reforming the minimum wage decision-making structure. This will include standards for deciding the minimum wage as well as the number of committee members,” Hong said in the meeting.
The sharp rise of the minimum wage in 2018 is widely considered a major factor in job losses and the closing of some small businesses.
Since taking office last month, Finance Minister Hong said the government would upgrade the minimum-wage decision-making structure.
The Moon government increased the minimum wage in 2018 16.4 percent.
Not only was it the sharpest rise since 2001, when the rate was increased 16.6 percent, it was almost double the 7.3-percent increase in 2017.
This year, the government raised the minimum wage 10.9 percent. Although it was a drop from 2018’s increase, it was still a faster increase than average over the last decade.
The last time prior to 2018 the minimum wage was raised double digits was in 2007, when it rose 12.3 percent.
The burden of higher wages was felt throughout 2018, with jobs sensitive to wage changes vanishing rapidly. Jobs in manufacturing were also lost.
The popularity rating of the Moon administration has fallen rapidly.
Hoping to turn the tide, the government has been looking for better ways to adjust the minimum wage so that the next increase, slated for 2020, will not do so much damage.
The government said it will consider a wide range of factors, including market conditions and the economic impacts of increases.
Finance Minister Hong during Friday’s meeting announced that the government will be front-loading 65 percent of the central government’s budgets during first half of this year to boost the economy. It will be targeting jobs and small public infrastructure investments.
The government last month announced the front-loading of 70 percent, or 281.4 trillion won ($250.4 billion), of 399.8 billion won of central and local government spending.
“The key words for this year’s economic policy direction is ‘public livelihood,’ ‘revitalization’ and ‘innovation,’” Finance Minister Hong said. “It is most of the public’s desire that the economy will rebound and that their daily lives would improve.”
Hong emphasized that the government is especially prioritizing three areas to create an investment friendly environment - reducing policies that bring uncertainty to the market, speeding up the innovation of regulation and encouraging innovative start-ups.
BY LEE HO-JEONG [firstname.lastname@example.org]