SEOUL, Aug. 3 (Korea Bizwire) — Small business owners in South Korea are making moves to adapt to the country’s new minimum wage hike, as a new survey shows nine in ten will downsize to offset the expected economic impact.
The surprising findings from a survey conducted by the Korea Federation of Micro Enterprise last month revealed that 68.1 percent of the 532 small-sized business owners surveyed said staff cuts are ‘most likely’, while 24.3 percent said ‘somewhat likely’.
Most respondents also believe that as business owners, they will have to work longer hours in the wake of the 16.4 percent minimum wage hike scheduled to take effect next year, which will bring the country’s legal hourly wage to 7,530 won ($6.67), with over 90 percent expecting to work an additional 10 to 12 hours per week.
Along with staff reductions, it seems working hours might also be cut for part-time workers, as the survey findings show the minimum wage hike could have a negative impact on the hours guaranteed to hourly workers.
While over half the small business owners surveyed said daily working hours for each part time employee currently average between six and eight hours, nearly 35 percent predict the typical work day could be shortened to between four and six hours.
Contrary to the warm reception from part-time workers, over nine in ten small business owners held a negative view of the government’s push for a higher minimum wage, a pet project of President Moon Jae-in that is expected to continue for the next few years.
As of June, over 33 percent of South Korean small business owners employed two to three part-time workers on average, while 24.1 percent hired three to five workers.
When it came to sales, nearly 60 percent of the respondents fell between 10 and 30 million won per month.
However, further questions revealed over two in ten small businesses are in the red, signaling severe competition in the market.
When asked why they think profitability has dropped, the decrease in customers as a result of the economic slump in recent years was most cited, closely followed by growing labor costs.
Hyunsu Yim (email@example.com)