Refrain from excessive demands

Negotiations on next year’s minimum wage have already missed the legal deadline, and the chances of a breakdown are increasing. At the second meeting of the Minimum Wage Commission last week, Chairman Park Jun-shik asked representatives of employers and employees to submit their demands in the next session. But both labor and management have failed to come up with unified proposals ahead of the legal deadline on Tuesday.

Behind the rough going in the minimum wage bargaining is the unexpected COVID-19 pandemic. Korean businesses now stand at the crossroads of life and death. New orders have been cut off for many of them, forcing some to lay off employees.

If the minimum wage rises in this situation, some firms will have to close. The labor circles’ position can hardly be more different, however. Union leaders say the minimum wage should go up further now that the coronavirus pandemic has made low-wage workers’ livelihoods harder than ever.

There is some sense in labor’s argument that COVID-19 has made workers’ lives more difficult. However, if companies have to close or lay off employees as a result of higher minimum wages, what good would it be for the labor community as a whole? According to a Korea Federation of SMEs survey of 600 member firms, 58.8 percent said they would reduce recruitment or trim existing payrolls if the minimum wage rises next year.

Even without the pandemic, small and midsize enterprises have suffered from minimum wage hikes of 33 percent over the past three years. This year, many economists forecast that the Korean economy will shrink because of the coronavirus shock.

If so, it will be the first economic contraction since the 1998 Asian financial crisis. This is time for all industrial players to tighten their belts, and the minimum wage cannot be an exception.