A step in the right directionDuring a special live TV interview marking the completion of his second year in office last week, President Moon Jae-in hinted at moderation in increasing the minimum wage.
“We do not have to cling to the campaign promise of achieving an hourly minimum wage of 10,000 won ($8.50) by 2020,” he said, admitting to the “considerable burden” caused by the sharp increases in the minimum wage. He said he expected the raise to be at a reasonable level that the broader society agreed on. His comments drew support from both ruling and opposition parties.
Democratic Party (DP) Rep. Song Young-gil became the first from the ruling party to call for a freeze in the minimum wage next year. Instead of increasing the base rate, he proposed tax breaks for low-income earners and state measures to ease housing and private education costs to help bolster real income for workers while lessening the burden for employers. Main opposition Liberty Korea Party (LKP) Rep. Kim Hak-yong also said the minimum wage should be frozen or raised no more than the inflation rate.
The minimum wage has gone up 29 percent over the last two years. When counting in weekend overtime, the minimum wage jumped nearly 50 percent under the Moon administration. Small businesses have been devastated. Even big companies have scaled back recruitment, aggravating youth unemployment. External conditions for the economy have also worsened, pushing exports down for the fifth month in a row.
Bus drivers across the nation have threatened to strike on May 15, demanding measures to compensate the loss in monthly income as the result of the enforcement of the 52-hour workweek. The minimum wage and universal cutbacks in working hours have shaken the fundamentals of the Korean economy. The president is right to correct his misjudgment before further damage is done.
The question is whether the president can act on his word. Actions have been slow despite the signal for change. The government must show its will in the appointment of new members to the Minimum Wage Committee as it must replace the public representatives on the rate-setting board after they resigned en masse last week.
The public representatives relay the government position to mediate between the representatives of employers and workers to reach a consensus on setting the base wage level for next year. The appointments will be closely watched by companies and the self-employed.