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Moderate the minimum wage

July 14,2018
Over three million small merchants across the country have joined forces to revolt against the government move to raise the minimum wage to 10,000 won ($9.4) by 2020. They announced that they would boycott the wage guidance for next year if further hikes are made.
The Korea Federation of Micro Enterprise said in a press conference on Thursday that merchants under the body will declare a self-moratorium on the state-set minimum wage and instead pay a rate based on separate wage agreements between employers and employees.

An association representing convenience store owners also held a press conference and announced that they won’t comply with further hikes in the minimum wage. They claimed they would rather go to prison for violating the rules than pay for unaffordable labor.
To be considered a small-scale merchant, manufacturing facilities must have 10 or less workers and service businesses must have five or less employees. Experts have warned that many small merchants won’t be able to afford the minimum wage. The Minimum Wage Commission estimates 2,661,000 workers have not been paid this year’s minimum wage. Employers reprimanded by authorities for breaking the minimum wage rule totaled 928 in the first half, up 43.7 percent from the same period a year ago.

The labor side nevertheless has demanded 10,790 won for next year’s minimum wage, a whopping 43.3 percent jump from this year’s level. At such a rate, the country would make the majority of small merchants criminals. Under the law, an employer who violates the minimum wage rule faces up to three years in prison or a maximum fine of 20 million won. It is ridiculous to make unreasonable laws and make criminals out of innocent citizens.

In order to not break the law, employers would have to reduce the jobs of 6 million workers employed with small-scale workplaces. Employment data has been worsening after the minimum wage was pulled up. The number of precarious workers — those hired temporarily or on a daily basis — fell by 247,000 in a year.

The government has so far remained steadfast, unwilling to own up to the harm this income-led growth policy has caused. But following the June job data that showed new jobs more than halved from a year ago, Deputy Prime Minister for economy Kim Dong-yeon said in Thursday’s cabinet meeting that the minimum wage hike had affected some industries and work of some ages. Hong Jong-haak, minister of SMEs and Startups, said ill effects from minimum wage have to come forward before a positive impact can be made.

Their evaluation must lead to real action to moderate the pace of raising wage levels. Workers are not the only weak parties the liberal government should pay special attention to. Many of the small merchants fall under the low-income bracket. Yet they are responsible for one fifth of jobs for low-income workers. The state must not victimize them to prove a point on its experiment on income-led growth policy.

JoongAng Ilbo, July 13, Page 30