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Forcing employers to raise wages?

June 13,2017
Kim Jin-pyo, chairman of the advisory committee in charge of mapping out President Moon Jae-in’s policy outlines for the next five years, said the new government is preparing measures to raise the minimum hourly wage to 10,000 won ($9) by 2020 from the current 6,470 won. The hike in pay for part-time work would be felt the most by small merchants and restaurant owners.

Kim singled out the lowering of the credit card commission fees as a way for employers to be relieved of the financial burden. He said self-employed merchants could afford higher labor costs if their commission fee expenditures were cut. He added that there were several ideas to lower the fees without translating the cost to credit card companies. Deferring hikes in minimum wage to low-income self-employed businesses is among the ideas to ease the side effects.

Raising the legal minimum wage base has been sought since the previous administration. All presidential candidates in the May 9 election vowed to increase the hourly wage base to 10,000 won during their term. Increasing earnings for low-income workers will help to revive consumption and domestic demand. Regardless of good intentions, the policy could cause more controversy as it is being pushed ahead unilaterally.

In a meeting with the advisory committee and the Korean Chamber of Commerce and Industry and the Korea Federation of Small and Medium Business, business organization group heads advised discretion in the policy as a spike in the hourly pay to 10,000 won over the next three years could upset the business community. The committee members scolded them for talking on behalf of employers. After seeing the emotional response from the committee, members from the small and mid-sized enterprises reportedly kept silent.

Moon had promised to hear out every side in making policies and end with the domineering and top-down ways. The economy must be based on pragmatism. Idealistic policies also must not disregard reality. Changes can be possible when the concerning parities agree. The government must not think it can force employers to raise wages.

JoongAng Ilbo, June 12, Page 30