Choo lobbies companies to limit salary increases

Finance Minister Choo Kyung-ho, third from left, attends a meeting with members of the Korea Enterprises Federation in Mapo, Seoul, on Tuesday. [JOINT PRESS CORPS]

Finance Minister Choo Kyung-ho is pushing private enterprises to contain salaries as the government tries everything to control prices without shutting down the economy.

In a meeting with the Korean Enterprises Federation, he said that high pay at tech companies and other large enterprises is starting to influence the broader market for employees.

Wage-push inflation, whereby prices of goods and services are driven up to cover higher payroll, is now a distinct possibility.

"Excessive wage rises not only worsen the inflation situation but also widen the wage gap between large and small companies," Choo said, adding that the dynamic will starve smaller companies of talented workers.

"Also, it won't be easy for companies to maintain competitiveness paying high wages and high costs," Choo said.

While stressing that wages should be negotiated between a company and its workers, the finance minister asked that under the current economic situation, wages should be raised at a rate in line with productivity increases.

He asked businesses to actively participate in the lowering of consumer prices.
"We request businesses absorb as much of the factors that contribute to increasing consumer prices by improving productivity and cutting primary costs," Choo said. "The government's foremost economic policy is stabilizing the prices of goods, and we are mobilizing every available policy.

"But there is a limit to what the government can do."

The meeting took place the day after the government announced an increase in utility prices from July, which could further fuel inflation.

Inflation was 5.4 percent in May, the highest monthly figure in 13 years, and Choo said Sunday that it is likely to break 6 percent this month.

To fight price increases, tariffs have been cut and the gas tax reduced. Efforts recently extended to lobbying against wage increases.

IT companies have been especially aggressive in increasing salaries, with Naver, Kakao, Line, Coupang and Baedal Minjok leading the way.

The average annual salary at Naver was 120 million won ($93,000) in 2021. The figure also includes stock options. Kakao's was 170 million won, Toss 93 million won and Samsung Electronics 144 million won

Labor is requesting a minimum wage increase of 19 percent to 10,890 won an hour next year.

At the Tuesday meeting with the finance minister, 27 members of the KEF attended, including: federation Chairman Sohn Kyung-shik; Samsung Electronics President Rhee In-yong; Lee Hyung-hee, SK SUPEX Council Social Value Committee chairman; Hyundai Motor Vice President Jung Sang-bin; Ha Beom-jong, LG Corp. president; and Song Yong-deuk, Lotte Holdings vice chairman.

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