South Korea’s wage lift irks firms

South Korea’s business groups and umbrella labour union expressed disappointment after the government said on Saturday it would raise minimum wages by 10.9% for 2019.

The Minimum Wage Commission announced that minimum wages would be raised to 8,350 won (R98) an hour in 2019, lower than what workers had proposed.

Businesses also criticised the move as they had sought to freeze salaries amid signs of growing economic headwinds and the fallout from a rise in US trade protectionism.

A group representing small businesses said it would not implement the reform as members were already grappling with higher minimum wages.

South Korea’s President Moon Jae-in has pledged to raise the minimum wage by 55% to 10,000 won per hour by 2020 as part of efforts to boost consumption and growth.

After a 19-hour meeting that ended on Saturday, the wage commission agreed on the hike, which was smaller than 2018’s 16.4% rise, amid worries about weak job growth.

South Korea added a monthly average of 142,000 jobs between January and June 2018, the slowest growth seen since the 2008-09 global financial crisis, said Statistics Korea.

The group of small business owners called the wage hike a “unilateral decision” and said it would impose a “moratorium” on its implementation.

“We can’t accept the decision by the Minimum Wage Commission,” the Korea Federation of Micro Enterprise said.

“Small business owners are at a crossroads where they cannot help but choose either business shutdowns or staff cuts,” the association said, adding that they were facing a “miserable reality”. It said its members would discuss the possibility of more action.

The Minimum Wage Commission said it would submit proposals to the government to support small merchants facing difficulties.