SEOUL, Jul. 20 (Korea Bizwire) — A new survey shows nearly 8 out of 10 employers are considering downsizing staff after the country’s new minimum wage of 7,530 – set to kick in next year – was announced last weekend.
Findings from the survey on the new minimum wage released by recruitment website Alba Heaven on Wednesday showed the growing financial burden caused by the increased minimum wage could lead to job cuts, with nearly 25 percent of business owners saying they are thinking of slashing staff by 50 percent, while another 25 percent are considering a 10 to 20 percent staff cut.
Instead of hiring new staff, those toying with the idea of running a business as a family accounted for over 20 percent, while over 9 percent were willing to face the new challenges posed by a high minimum wage by operating their business alone.
The survey, which was conducted last week with a sample of 5,804 part-time workers and 352 employees, comes in wake of the government’s decision to increase next year’s minimum wage by 16.4 percent, as part of its long-term plan to reach a so-called ‘livable wage’ of 10,000 won by 2020.
Over seven in 10 part-time workers are content with next year’s drastically increased minimum hourly wage, while over 70 percent of employers turned out to be dissatisfied with the increased economic burden, with only 20 percent saying that they would maintain current staffing levels.
When asked when they expected the Moon administration’s promise of a 10,000 won minimum wage will be delivered, 37 percent of part-time employers said 2019, while 35.3 percent of employees said 2024, underlining the difference in attitude shown towards the government’s approach to the current working conditions.
Though reports of a rise in the minimum wage were widely well-received, the hike was also met with worries from business interest groups.
In response to the worries over the growing burden expected to be felt by small business owners in the coming years, Moon pledged to cover any excess surpassing 7.4 percent in the annual minimum wage increase for small and medium sized companies over the next five years, with plans to adjust the minimum wage increase rate depending on its impact on the South Korean economy.
The Korea Federation of SMEs has estimated that South Korean businesses would be forced to pay an additional 140 trillion won in wages over the next three years, provided that the country’s minimum wage increased 15 percent per year until 2020.
Hyunsu Yim (firstname.lastname@example.org)