Minimum Wage Hike Appears to Backfire with Less Employment

Write : 2018-01-11 15:09:59 Update : 2018-01-11 16:36:53

Minimum Wage Hike Appears to Backfire with Less Employment

Anchor: The government this year raised the country’s minimum wage by 16-point-four percent to an hourly rate of 7-thousand-530 won or about seven dollars an hour, the steepest annual increase since the year 2000. It was a controversial move-- sparking concern that higher wages could cause decreased hires and layoffs. President Moon Jae-in called for countermeasures to deal with the possible fallout but it appears the difficulties have already begun. 
Our Oh Soo-young has this report. 

Report: A university in Seoul saw the number of its janitors and security guards drop by 27 this year. 
A total of thirty two subcontracted workers retired last year from the school but most of the vacancies were not filled. 

Janitors from service providers complain that the university is filling the spots with part timers instead.
[Sound bite: Song Young-ho - subcontracted janitor (Korean)]
"If they continue to fill posts left vacant by retirees with part-timers, we cannot help but feel threatened."
For the university employer, it was an unavoidable business decision to deal with rising labor costs.

Security guards at apartment complexes are among the workers affected. Ninety four guards were fired from an apartment complex last month. They filed for an injunction, claiming that they didn't get a sufficient notice. 
[Sound bite: Apartment security guard (Korean)]
"We didn't get any kind of explanation so we were very anxious and some were looking for jobs elsewhere."

At many local convenience stores and gas stations, employers are reducing work hours to deal with the rising cost. A convenience store owner said that he decided to work six hours a day during weekends.  

[Sound bite: Convenience store owner (Korean)]
"I have no choice but to work because that way I can save labor costs."

Concerns continue to grow as the Moon administration plans on further raising the minimum wage to ten thousand won per hour by the end of his five-year term.
Some economists, including Prof. Jung Jae-hoon at Seoul Women's University, believe while there is a need for a rise in hourly wages, they shouldn't be imposed on small businesses. They said the government should aim to tackle more fundamental issues that cause a lag in wage growth.
[Sound bite: Jung Jae-hoon- Prof. of Seoul Women's University (English)]
"The government needs to focus on enhancing SMEs' overall competence in the market by improving corporate structure and conditions across the private sector. By supporting the framework for businesses to grow, SMEs can build up the capacity to raise wages on their own."

According to a survey conducted by Job Korea last month, 80 percent of 304 small business owners plan to reduce the number of part-time workers they hire this year, due to higher hourly wages.  

Earlier this week, President Moon Jae-in said that raising the minimum wage is absolutely necessary to ease extreme income inequality and allow for a humane life for low-wage workers.
He said that the higher minimum wage policy can swiftly take root when side effects and corporate difficulties are minimized in the implementation process.
Oh Soo-young, KBS World Radio News.

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