Posted July. 17, 2017 07:19,
Updated July. 17, 2017 07:23
President Moon Jae-in, who sought to persuade the labor sector by asking them to wait just one more year has given the labor sector as his first gift. The Minimum Wage Committee has fixed next year’s hourly minimum wage at 7,530 won (6.64 U.S. dollars), up 16.4 percent from this year.
The hike is quite drastic since it is even higher than the government’s pledge (at least 15.6 percent per year), and entails a double-digit increase for the first time in 11 years. The raise is the highest in terms of amount and the fourth highest in terms of increase rate. The so-called "J-nomic (Moon Jae-in government’s economic policy)" that calls for income-led growth is picking up speed in the wake of the minimum wage hike.
The government plans to provide direct subsidies to small employers to help cover the raise in next year’s minimum wage. A taskforce of related government ministries will determine the firms eligible for such subsidies and amounts and reflect the subsidies in next year’s state budget. About 3 trillion won (2.65 billion dollars) in state budget will likely be spent on the subsidies.
Heads of small merchants and small- and medium-sized enterprises have declared that they will bolt the Minimum Wage Committee, but the labor community is now trying to avoid expressing satisfaction. The two major umbrella labor unions issued a statement reading “(The increased) minimum wage is (still) far smaller than the necessary amount for a family of two to three members to live and maintain the basic quality of life.” However, the unions are apparently pleased to see that achieving 10,000 won (8.8 dollars) in hourly minimum wage by year 2020 is a goal that is now within reach.