Editorial: Labor community should listen to the cries of small business owners

2023.06.23 13:00:02 | 2023.06.23 13:48:39

Members of the Korea Federation of Micro Enterprise are protesting with pickets at a resolution meeting calling for a freeze on the minimum wage held near the National Assembly Station in Seoul on June 21. [Photo by Lee Chung-woo]이미지 확대

Members of the Korea Federation of Micro Enterprise are protesting with pickets at a resolution meeting calling for a freeze on the minimum wage held near the National Assembly Station in Seoul on June 21. [Photo by Lee Chung-woo]



South Korea’s two largest labor unions, the Federation of Korean Trade Unions (FKTU) and the Confederation of Korean Trade Unions (KCTU), are demanding a 27 percent increase in the minimum hourly wage next year, to 12,210 won ($9.37) from 9,620 won this year.

This would be a repeat of the 42 percent hike in the minimum wage to 9,160 won from 6,470 won during the five years of the Moon Jae-in administration, which pushed the self-employed and other small businesses into pain.

Moreover, the self-employed are groaning under the weight of debt as they navigate the Covid-19 pandemic. Their loan balances stand at 1,034 trillion won, up by 349 trillion won from the end of 2019, before the pandemic. If the minimum wage is raised again, small businesses will be unable to pay their debt and eventually collapse. That’s why small business owners rallied in front of the National Assembly on Wednesday, chanting that “raising the minimum wage is an act of destroying their right to survive.” However, the labor community is turning a deaf ear to their cries. The labor community is rather mocking small business owners with an unreasonable argument that “raising the minimum wage will improve the national economy.”

A rise in the minimum wage is also detrimental to workers. As a result of the previous administration’s drastic increase in the minimum wage, the number of workers who could not receive the minimum wage soared to 3.22 million in 2021 from 2.66 million in 2017. A 27 percent increase in the minimum wage next year will further increase the number of workers who can’t benefit from the minimum wage. Struggling small businesses will be forced to lay off workers due to the wage burden. The most vulnerable workers will be the first to lose their jobs. South Korea should take this opportunity to consider differentiating the minimum wage by industry and region like Japan.

In South Korea, the ability to pay wages varies greatly by industry. The agriculture, forestry, and fisheries industry cannot afford to pay the minimum wage to 55 percent of its workers, and the food and lodging industry cannot afford to pay the minimum wage to 40 percent of its workers. This illegality is unavoidably happening. Applying a uniform minimum wage while ignoring this reality will only have the opposite effect of driving small business owners to the brink and reducing employment. It is frustrating that the labor community closes its eyes to this truth and clings to violent illegal demonstrations. Even a Federation of Korean Trade Unions (FKTU) official, a member of the minimum wage committee, was detained for allegedly brandishing a weapon during the protest. The labor community should accept the government’s decision to dispel him from the commission. Coexistence should be pursued instead of violence. Stopping the skyrocketing minimum wage is a start for coexistence.

By Editorial Team

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