The minimum wage for next year has been determined at 10,320 won per hour through an agreement between workers, employers, and public interest commissioners for the first time in 17 years since 2008. This is an increase of 290 won (2.9%) from this year's minimum wage of 10,030 won. While the small and medium-sized enterprises community has expressed respect for the agreement, self-employed individuals are voicing the need to improve systems such as weekly holiday pay to reduce labor costs, as the minimum wage is set to rise again next year.
The Korea Federation of Small and Medium Enterprises noted on the 11th regarding the minimum wage increase, "In order to overcome the complex crisis situation, there is a need for both labor and management to make some concessions and coordinate their positions instead of repeating existing conflicts, and this agreement reflects that sentiment."
Since the system was introduced in 1988, the minimum wage has never been frozen or reduced. The small and medium-sized enterprises community has argued that considering the worsening business environment, a freeze or cut is necessary this time. However, they have repeatedly engaged in dialogue in consideration of the social atmosphere due to economic recession and the need to resolve conflicts, and they accepted the 290 won increase proposal.
However, KBIZ mentioned, "We hope that policy support and supplementation will be provided simultaneously so that the increase in the minimum wage does not lead to worsening management difficulties or job reductions."
When converted to a monthly salary, next year's minimum wage amounts to 2,156,880 won based on a 40-hour work week, which is an increase of about 60,000 won compared to this year (2,096,270 won).
Small business owners and the self-employed expressed concerns about the rise in labor costs. While the increase rate is not high, it has created grounds for increases in raw materials, rental fees, and others. Furthermore, when including the weekly holiday pay given to workers who work more than 15 hours a week and complete the week without absenteeism, the minimum wage exceeds 12,000 won. During the agreement process, commissioners from the Korea Federation of Micro Enterprise initially opposed the 290 won increase proposal but ultimately shifted their stance towards agreement.
A representative from the Korea Federation of Micro Enterprise said, "Last year, the number of businesses, including individuals and corporations, that filed for closure exceeded 1 million, and it is necessary to consider various factors including labor costs, raw materials and material costs, loan repayments, and rental fees."
They continued, "Some small businesses hire employees for less than 15 hours a week to reduce the burden of weekly holiday pay. Last year, 1.74 million people worked for less than 15 hours a week," and added, "If this situation continues, the quality of employment will deteriorate, and workers will not secure enough working hours, leading to dissatisfaction."
The trend of hiring 'experienced workers' or replacing staff with unmanned kiosks is expected to continue in small business sites due to the minimum wage increase. Large franchise corporations, such as convenience stores and fast food chains, have already introduced a considerable number of kiosks for ordering and payment tasks.
Mr. A, who recently converted his study cafe to unmanned operation, said, "The speed of responding to sudden situations such as equipment malfunctions or damage seems to have slowed down with the introduction of kiosks," but added, "Considering the burden of labor costs and rental fees, unmanned operation is a much better choice in terms of expense compared to deploying staff."