Amid economic forecasts predicting that the same trend is to continue this year, the suggestion in the OECD report Going for Growth 2017 of a higher minimum wage as a solution falls in line with the South Korean government’s efforts to narrow the income gap. (Image: Yonhap)
SEOUL, June 10 (Korea Bizwire) – Earlier this week, the special advisory committee of state affairs planning — a presidential transition team appointed by President Moon Jae-in — reaffirmed one of Moon’s campaign pledges to raise the minimum wage to 10,000 won by 2020 at a press briefing held in central Seoul.
The spokesperson of the committee called a 10,000 won ($8.90) minimum wage a ‘national political agenda’ during the regular briefing on Monday, while acknowledging the worries of small business owners over an increasing financial burden that could potentially kill jobs.
The government’s resolute approach to boosting the country’s current minimum wage of 6,470 won ($5.76) comes on the heels of growing income inequality coupled with the rising cost of living the country has experienced in recent years.
According to 2014 OECD figures, the top 10 percent in South Korea earned nearly five times more than the bottom 10 percent, closely following the U.S., the country with the highest income inequality, and leaving behind Japan, Spain and the U.K.
The stark income inequality is being felt in all aspects of South Korean life, particularly housing where the poor are most heavily hit.
In Seoul, where nearly one in ten households earns less than the minimum cost of living, the number of residents living in rented accommodation has hit a record high of 31.3 percent, according to the latest figures from the 2017 Seoul Survey.
Rising living costs are also a major contributing factor behind growing calls for a livable minimum wage in the country, as a recent report by the Economist Intelligence Unit shows Seoul is now the sixth most expensive city in the world, following Singapore, Hong Kong, and Tokyo.
For instance, the price of a tray of eggs in the country now stands at over 10,000 won, which many believe is ‘too costly’ even after considering the impact of a new outbreak of bird flu.
Against this backdrop, the newly elected Moon administration has made tackling income inequality its priority.
Speaking to the press, Blue House policy chief Jang Ha-sung said, “We need to seek a long-term and systematic approach to unemployment in order to tackle the worsening income inequality.”
As a solution, Jang argued more needs to be done to narrow the widening income gap between those working for corporations and those employed at small and medium sized businesses, as he believes average salaries at small businesses have reached unreasonably low levels over the past few decades.
Jang’s comments placed a focus on poor households who have been heavily hit by the country’s sluggish economy in recent years.
While the average income among the top 20 percent earners grew 5.5 percent last year compared to 2015, the figure dropped a whopping 9.8 percent among the bottom 20 percent, widening the income gap even further, according to a 2016 report on income distribution by Statistics Korea.
Amid economic forecasts predicting that the same trend is to continue this year, the suggestion in the OECD report Going for Growth 2017 of a higher minimum wage as a solution falls in line with the South Korean government’s efforts to narrow the income gap.
The government’s resolute approach to boosting the country’s current minimum wage of 6,470 won ($5.76) comes on the heels of growing income inequality coupled with the rising cost of living the country has experienced in recent years. (Image: 10000 Alba / Albanodong)
However, the proposed minimum wage is also facing criticism, particularly from the business community.
In a discussion held on Friday, Ha Tae-gyung, a member of the conservative Bareun Party, championed the voice of opponents to a higher minimum wage, as he said it could deprive the socially marginalized of the ladder of opportunity.
As opposition from small business owners and skeptics of liberal economic policies have put the Moon administration on a rocky path to achieving a livable minimum wage by 2020, finding a way to persuade the opposition is likely to be one of the biggest challenges facing the Moon administration on its path reducing income inequality.
Hyunsu Yim (hyunsu@koreabizwire.com)
