Korea raises minimum hourly wage to 7,530 won for 2018
SEOUL (The Korea Herald/ANN) - South Korea's minimum wage for next year was set at 7,530 won (US$6.64) per hour, up 16.4 per cent from this year, officials said Saturday.
South Korea’s Minimum Wage Commission set next year’s minimum hourly wage at 7,530 won ($6.64), in the steepest on-year increase in 17 years, making the first big step toward realizing President Moon Jae-in’s vision of 10,000 won by 2020.
In a 15-12 vote, the 27-member trilateral council of representatives from labor, management and the general public, decided to increase the lower limit of wages by 16.4 per cent for 2018. It was the biggest gain since 2000, when the bar was moved up by 16.6 per cent.
This year’s minimum wage was set at 6,470 won per hour, up 7 per cent from a year ago.
At least 4.63 million workers, or 23 per cent of all workers, will be directly affected by the increase, based on data from Statistics Korea.
Those who work eight hours a day on the minimum wage will receive 60,240 won a day and 1.57 million won a month.
“The suggestions made by both sides (labor and management) reflected the government’s will to push for a minimum wage for 10,000 won (by 2020),” said Uh Soo-bong, professor at Korea University of Technology and Education, who chairs the commission.
The liberal Moon Jae-in administration is pushing for “income-led growth,” stressing that an increase in household income will create a virtuous economic cycle of stronger domestic consumption, higher corporate profits and more jobs.
To realize this, Moon has vowed efforts for a higher minimum wage and a reduction in average working hours.
Employers, particularly small- and medium-sized business owners, have been calling for caution, fearing increased labor costs could threaten the fundamental of their business.
Mindful of this, the government on Sunday moved swiftly to come up with measures to support them.
“The decision will benefit many workers, but it could also put a heavy burden on small business owners,” said Finance Minister Kim Dong-yeon during a meeting with economy-related ministers.
The government will set aside a fund worth 4 trillion won and more to financially support SMEs, Kim told the press.
The government will roll out various measures to offset the increased labor burden of SMEs, he said, such as reducing commission fees charged by credit card companies and cutting value added taxes for small businesses, Vice Finance Minister Ko Hyoung-kwon added.
Earlier, employers and major corporate lobbies voiced concerns over the drastic hike.
The Korea Employers Federation said the hike would take a toll on smaller businesses and deteriorate the business conditions for employers.
The Korea Federation of SMEs also claimed the small- and medium-sized enterprises will be crippled by the higher cost of labor.