South Korea’s minimum wage becomes a hot topic under Yoon | Labor rights

Seoul, South Korea – Choi Myung-gon works as a cashier during the night shift at a convenience store in southern Seoul, registering purchases and stocking shelves. During the long lulls without customers, he tries to study.

This year, Choi plans to take the South Korean civil service exam, a highly competitive test that thousands of people prepare for in hopes of landing stable government jobs. He hopes a high score will get him out of a low-paying job, but often finds it hard to concentrate on his books due to his irregular work schedule and long hours on his feet.

South Koreans typically work long hours, and slowing growth and rising costs of living in Asia’s fourth-largest economy are making it hard for many to get ahead.

While workers like Choi have received a boost in recent years in the form of big minimum wage increases, many are still struggling to make ends meet.

“Over the past five years, I don’t think minimum wage increases have improved the daily lives of workers much,” Choi told Al Jazeera. “Of course it’s better to have a higher salary, but with housing more expensive and food more expensive, things have become more difficult.”

Moon Jae-in
Former South Korean President Moon Jae-in oversaw several major minimum wage increases [File: Jabin Botsford/ Reuters]

Moon Jae-in, the leftist former president, took office in 2017 pledging to reduce inequality by raising incomes for low-wage workers. Moon, who left office at the end of his term in early May, argued that raising the minimum wage would trigger a virtuous circle in which workers with more money would spend more, boost consumption and create more wealth. jobs.

The minimum wage in South Korea currently stands at 9,160 won ($7.25) per hour. In 2018, Moon’s first full year in office, the minimum wage jumped 16.4%, the largest annual increase on record. The following year the increase was more than 10%, followed by increases of around 1-2 percentage points and 5.05% last year.

The recent inauguration of Yoon Suk-yeol, a political neophyte who represents the conservative People’s Power Party, has raised concerns that the steep increases of the past five years could continue.

Yoon’s office said it would not take an official position on this year’s minimum wage negotiations or join discussions, which began earlier this month.

Although short on specifics, Yoon, a former chief prosecutor who campaigned for the restoration of a market economy, pledged to adopt policies that give businesses more leeway to operate without excessive regulation.

Employer groups have called minimum wage increases in recent years excessive, arguing that street businesses like convenience stores and restaurants cannot afford to pay workers more. At the same time, workers like Choi say the increases are not enough in the face of soaring prices. In April, consumer price inflation in South Korea soared to 4.8%, its highest level since 2008.

New South Korean President Yoon Suk-yeol waves to supporters as he leaves after attending his inauguration ceremony.
South Korean President Yoon Suk-yeol has pledged to adopt market-oriented economic policies [File: Yonap via Reuters]

Worker and business representatives appear to be heading for contentious negotiations as unions insist a further rise in the minimum wage is needed to keep pace with rising costs, while employers say many small businesses have not yet recovered from the damage caused by COVID-19 and cannot bear any additional burdens.

At a meeting of the Minimum Wage Commission earlier this month, Lee Tae-hee, an official with the Korea Federation of SMEs, was quoted by local media as saying that small businesses were already worried to “only be able to pay this month’s wages”. .

The structure of the South Korean economy, where a small number of business conglomerates dominate and a large part of the population is employed by family businesses, makes wage negotiations a pressing issue for many households.

“South Korea has many small businesses that depend on low-wage workers who work long hours, and the rapid increase in the minimum wage was inevitably a burden for them,” said Choi Pae-kun, a professor of Economics at Konkuk University. in Seoul, told Al Jazeera.

Economists have also pointed out that there are alternative methods, such as tax credits, to improve the fortunes of struggling workers without imposing costs on small business owners, many of whom are barely getting by.

“In order to strengthen the incomes of low-income households, it is necessary to strengthen government transfer payments while adjusting the speed of minimum wage increases,” Choi said.

South Korean legislator Kang Eun-mi
South Korean politician Kang Eun-mi (pictured holding a microphone) has opposed proposals to differentiate the minimum wage by sector [Courtesy of Steven Borowiec]

In what would be an unprecedented development since South Korea instituted a minimum wage in 1988, employers have also advocated for minimum wage differentiation by industry. Under the proposals, instead of a national standard for all workers, some low-margin businesses, such as restaurants and motels, would be allowed to pay less.

Labor groups and leftist politicians balked at the proposed change.

At a recent press conference outside the presidential office in Seoul, Kang Eun-mi, a politician from the leftist Justice Party, called on the government to recognize the role of the minimum wage in protecting the living standards of the most vulnerable. vulnerable in society.

Differentiation by sector would disproportionately hurt women, youth and temporary workers, Kang said, imploring participants in this year’s negotiations to keep vulnerable groups in mind.

“We must work so that the objective of the minimum wage is not compromised.”

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