SEOUL, Jul. 23 (Korea Bizwire) – A majority of small business owners in South Korea are considering reducing staff after being having difficulty coping with the government’s recent minimum wage hikes, the latest of which is set to come into effect next year.
According to a survey of 300 small business owners and vendors performed by the Korea Federation of SMEs, 74.7 percent said that coping with the wage hike would be difficult next year when the minimum wage is set to rise by 10.9 percent to 8,350 won.
Similarly, 75.3 percent of respondents said that their business was struggling, stemming from worsened sales in the first half of the year compared to the year previous.
Only 2.3 percent said that business was “satisfactory.” Of the respondents who said that sales figures had worsened, 44.2 percent said that monthly sales were down by more than 20 percent.
When asked about the factors that caused the crisis, 61.1 percent of respondents pointed to domestic sales, followed by labor costs including the minimum wage hike (57.5 percent), increased competition (30.1 percent), and an increase in material costs (29.2 percent). Multiple answers were allowed for the survey.
In order to help cope with the crisis, small business owners and vendors said that they would reduce staffing (53.1 percent), make efforts to befriend the market (29.2 percent), raise prices (13.3 percent), shorten working hours (11.5 percent) and consider closing down their business (11.5 percent).
Among business owners and vendors, 89.9 percent said that work hours had increased compared to last year, which possibly meant that work intensity had gone up.
Kim Gyeong-man, an official at the Federation of SMEs overlooking economic policies, said that the government should put in place measures such as lowered credit card processing fees to counter the shock of the minimum wage hike.
“The new wage hike should be implemented differently by business type and size,” said Kim.
H. S. Seo (email@example.com)