Biz lobby struggling to contain members
The Korea Employers’ Federation (KEF) has been struggling to contain growing complaints from member companies, which are unhappy about the 16.4 percent minimum wage hike planned for next year.
Textile and other labor-intensive manufacturers have been complaining that the KEF, which advocates the interests of business owners, failed to do its job by letting the hourly minimum wage surge to 7,530 won from this year’s 6,470 won.
Some KEF members, including Chonbang, even threatened to leave the association.
The KEF, headed by Chairman Bahk Byong-won, has been sidelined by the Moon Jae-in administration, which has placed top priority on improving workers’ wellbeing.
It has largely remained silent since late May when President Moon and his policy advisers assailed it for not following the government drive to turn temporary jobs into permanent ones.
KEF Vice Chairman Kim Young-bae had previously criticized President Moon’s policy to eliminate irregular workers, arguing it would further increase the gap between small and large companies.
Frustrated by the KEF’s failure to stop a “steep” hike in the minimum wage, Chonbang Chairman Cho Kyoo-ok said Friday that the textile company may leave the association.
Chonbang was the first company to join the KEF when it was founded in July 1970.
“I feel betrayed by the KEF,” Cho said. “If the hourly wage goes up by 16.4 percent next year, Chonbang has to close its doors. I am really disappointed with the KEF’s failure to represent the interests of its members during the minimum wage decision process. We may decide to abandon its membership.”
The company, which employs more than 1,600 people, paid more than 20 billion won in salaries in 2016, about 10 percent of its annual sales.
Cho said Chonbang has accumulated more than 34.3 billion won in deficits from 2014 to 2016, due mainly to rising labor costs, adding it may have to stop operating plants in 2018.
He said if the company wants to keep running the plants, it has to dismiss 600 workers.
“The role of the KEF has diminished since President Moon came to power,” said an executive at a major business association who asked not to be named.
“So it didn’t have much say in this year’s minimum wage negotiation, unlike in the past. I don’t think any company would actually exit the KEF. But this shows how difficult it is for the association to maneuver under this administration.”
However, the KEF said things have been as usual.
“We have been doing what we always do,” a KEF spokesman said.
“We don’t believe Chonbang will leave. We see Cho’s remarks as heartfelt advice, telling us to do more to represent the interests of employers.”