Mom and pops get invited to Blue House

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Mom and pops get invited to Blue House

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President Moon Jae-in, front and center, surrounded by small shop owners during a meeting Thursday at the Blue House. Some 160 people, including representatives of an organization for small businesses and traditional markets, were invited for the first time. [JOINT PRESS CORPS]

President Moon Jae-in said the opinions of small merchants will be factored in when deciding next year’s minimum wage.

But he stuck to his guns on the basic notion of raising the minimum wage - despite the loss of countless jobs - saying it’s for the best in the long term.

“Small businesses and merchants continue to remain in difficulty,” Moon said Thursday at a meeting of 160 people at the Blue House, including representatives of small businesses.

“Due to over-competition, rising rents and big franchise commissions, the burden is heavy,” Moon said. “And to make the situation worse, the minimum wage hike seems to have added to the difficulties.”

But in the long run, he said, the minimum wage should be raised.

“If actions such as lowering credit card commissions, support for a job creation fund, support for the four insurance programs [national pension, health insurance, the industrial accident compensation fund, and employment insurance], protection of shop leases and improvement in the relationship between franchiser and franchisee were to have been made, small business owners would have been able to carry the minimum wage hike,” Moon said. “But because these supplementary measures needed the approval of the National Assembly, we weren’t able to meet the speed of the minimum wage hike, which was increased first.”

Since late last year, Moon has been slowly backing away from his earlier defense of the minimum wage hikes. Earlier, he tried to emphasize the good side of such hikes, such as the boost to household incomes.

But as jobs keep disappearing and the income gap between the top and bottom tiers widens, Moon has been forced to relinquish his long-term goal of getting the minimum wage up to 10,000 won ($8.9) an hour by the end of his term.

On Thursday, a participant in the Blue House meeting even asked if the government could freeze the next year’s minimum wage.

The meeting took place a day after Statistics Korea released a disappointing jobs report saying only 19,000 new jobs were added in January compared to the same month a year ago, the lowest number in five months.

While the manufacturing industry was largely to blame - it lost 170,000 jobs gone, down 3.7 percent compared to the previous year - the situation for small businesses continues to deteriorate.

The category of owner-operated businesses with additional employees lost 49,000 jobs lost while those without employees lost 12,000, meaning that those businesses folded.

Small stores, such as restaurant and convenience stores, have been particularly affected by the minimum wage hikes, which were double digit for this year and last.

During a televised New Year’s press briefing at the Blue House last month, Moon said the government will step up measures to help small businesses.

On Thursday, Moon stressed the importance of such businesses with over 5.64 million people running such stores. And when including the 1.1 million family members that work at these stores without pay, he said they account for 25 percent of the 26.8 million people working in Korea.

“If the size of the stores are so great, it should only be fair that they have their own independent economic policy,” Moon said.

The president said that under the existing system, economic participants are divided into management and labor unions and that such store owners are labeled as management.

“But in reality, the self-employed person labors and the incomes of those in the middle and lower end of society - working in such stores - are much worse than those of paid workers,” Moon said.

Moon said the government will do its best so the livelihoods of small stores will improve significantly starting this year.

One of the first steps is issuing 18-trillion-won worth of gift certificates that can only be used in small stores and businesses by 2022.

The president added that the government will push forward a so-called “back alley renaissance” project that would upgrade 30 outdated downtown areas nationwide.

He said the environment of these areas will be improved according to the characteristics of the neighborhoods and will transform the commercial areas into shopping district that also offer cultural events and attract new businesses started by young people.

He said this year the government has significantly raised the budget supporting traditional markets to 537 billion won, a 43-percent hike from last year’s 375.4 billion won.

“When we allowed parking on the roads surrounding traditional markets, visitors went up 30 percent and revenues were up 24 percent,” Moon said.

“I am the son of a back-alley store owner,” said Moon. “When I was young my parents once ran a store selling briquettes and on the weekend and during school breaks I would deliver the briquettes.

“As a young person, more than the physical hardship, I felt very ashamed of being covered in black [from the briquette.] But that was how families protected their livelihoods and searched for hope. I don’t think the situation has changed significantly for store owners whose shops are in back alleys and self-made businesses.”

He said the government will do its best so small businesses could still have hope even when faced with the difficulties of today.

This was the first meeting the president held with small shop owners and representative of traditional markets. It was his fourth meeting this year corporate sectors including heads of conglomerates, start-ups and IT giants.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]

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