The government announced that the minimum wage next year will increase to 8,350 won from 6,470 won in 2017. That is a 29.1% increase over two years. It is a drastic increase in only two years. As a result of this announcement, many self-employed people have complained about this change.
Raising the minimum wage impacts all parts of Korean society. According to a survey conducted by Statics Korea, temporary employees decreased by 130,000 compared to last year. Also, South Korea has one of the highest rates of self-employed people among OECD countries at 25.5%. This is higher than all other advanced countries. The more self-employed people there are, the more carefully the government has to consider this matter.
As the minimum wage increases, the burden on self-employed people increases. This is because they have to pay more money to their employees. As a result, this can damage not only the self-employed people, but also their workers. After the minimum wage increased, business owners have reduced the number of employees they have and the number of hours their employees work. Therefore, raising the minimum wage makes employees worry about earning a living.
The IMF warned that increasing the minimum wage suddenly in South Korea will result in economic damage around the country. It insisted that Korea has to carefully consider the consequences of this change. For instance, France slowed the growth of the minimum wage after side-effects occurred in 2005. In addition, he said that increasing the minimum wage can weaken employment, especially in service industries. This can then cause inflation.
The Nation Assembly introduced revisions to the minimum wage law. The Nation Assembly announced that the law now includes different minimum wages by industry. For example, a small restaurant owner will pay a lower minimum wage than Samsung. The Bank of Korea stated that the government has to arrange comprehensive measures to improve the ability of paying wages.
To prevent negative side-effects from increasing the minimum wage, we need to use a variety of strategies. Above all, the minimum wage is standard that government establish to insurance well-being of nation. The purpose of the minimum wage is to help reduce the disparity between high-wage and low-wage earners. This contributes to make the lives of low paid workers better.