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Minimum wage committee meets, start rocky

June 20,2019
As resistance to a minimum wage rise builds, the first step has been taken in the process for deciding next year’s level.

The meeting of the Minimum Wage Commission on Wednesday had a rocky start, with business and labor at odds despite efforts by the head of the committee to create a platform for constructive discussion.

“Today is a meeting where we start our review on minimum wage [for 2020],” said Park Jun-sik, Hallym University sociology professor and head of the commission. “I believe we have a very important responsibility when listening to many stories, with people saying the minimum wage is not high enough and others voicing their struggles with the hikes.”

“I hope [the commission] will be able to reach an optimal decision which will satisfy the public.”

The meeting kicked off after the commission held six public hearings across the country, the first in Seoul on June 5.

Business representatives argued that they had already tolerated near 30 percent hikes over two years and that additional increases will not only further burden businesses but affect the workers as well.

“Through stabilization in the minimum wage, there’s a need to send out a bold and symbolic signal to the labor market,” said Ryu Ki-jung, the Korea Employers Federation director.

Labor representatives argued that the 10,000 won ($8.50) per hour is a promise that needs to be kept and dismissed accusations that the higher minimum wage has weakened the economy.

“While I understand people like small merchants demanding the minimum wage be frozen, if it is frozen, why would there be a need for the commission?” said Lee Sung-kyung, general secretary of the Federation of Korean Trade Unions. “It would be difficult to continue with the meeting if the argument on freezing sees no end.”

Wednesday’s meeting was set up to discuss a general outline, including issues such as whether different minimum wages will be applied according to the nature of the industry and the size of businesses.

The 27 members included nine from business, nine from labor and nine representing the public and are set to make a proposal on next year’s minimum wage next week.

Recently, there have been growing demands from the business community, especially from small and medium-sized businesses, to freeze or even lower the minimum wage next year.

On Tuesday, 15 business groups representing SMEs, including the Korea Federation of SMEs, the Korea Federation of Micro Enterprise and the Korean Women Entrepreneurs Association, issued a joint statement demanding that next year’s minimum wage be frozen or lowered, citing the difficulty that businesses have been facing since the minimum wage was raised over the last two years.

“SMEs have been facing serious management crises after the minimum wage was raised sharply over the last two years,” the joint statement said. “Considering the economic condition and the negative impact it has had on businesses, it should at least be frozen.”

A recent survey of 357 SMEs by the Korea Federation of SMEs found that 29 percent of those polled said they will cut back on new hires if the minimum wage is raised, while 23.2 percent said they will even reduce headcount. Additionally, 7.8 percent said they will consider folding if the minimum wage is raised.

Politicians have also been showing signs of shifting from their previous support of the Moon Jae-in administration’s push for higher wages.

On Wednesday, Kim Hae-young, ruling Democratic Party supreme council member, suggested the minimum wage hike be limited.

“Many SMEs say they are having problems paying the paying minimum wage,” Kim said.

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