Rising minimum wage burdens small biz owners: survey

The Korea Times

The Korea Times

Business

Sun, October 1, 2023 | 02:14

Companies

Rising minimum wage burdens small biz owners: survey

Posted : 2023-06-09 08:18

Updated : 2023-06-09 17:25

The country's increasing minimum wage is pressuring many small business owners. Gettyimagesbank

By Ko Dong-hwan

A majority of small business owners in Korea are struggling to pay minimum wages to their employees and many are considering sacking workers if the current base pay rises further, according to a recent survey.

The survey by the Korea Federation of Micro Enterprise (KFME) showed that almost two out of three or 65 percent of the respondents wanted the current minimum wage to be lowered. The survey was conducted on 1,000 small business owners in the country last month.

The survey showed that 33 percent of the respondents wanted the present minimum wage of 9,620 won ($7.40) per hour to remain unchanged. Only two percent said the figure should be increased.

Almost 100 percent said the current minimum wage is "too burdensome," while over 53 percent said the wage is "excessively high compared to the level of productivity."

In a multiple-answer question that asked how the owners hire workers as the minimum wage continues to rise, 58 percent said they will hire fewer new employees. Over 44 percent said they will reduce the present number of employees, and 42 percent said they will reduce working hours for existing workers. Over 33 percent said they already sacked some of their employees due to an increasing financial burden caused by the minimum wage hike.

Most of the respondents also said the hourly minimum wage system, which is universally applied in the country, should be "adjustable" depending on the sector. As to how it should be adjusted, over 57 percent said the sectors that comprise the highest number of small businesses should benefit from the adjustment first.

Also, 32 percent said the adjustment should be implemented first to the sectors with the highest risks for business owners violating the minimum wage ― namely, agricultural, fishery, forestry, restaurants and lodging businesses.

The survey also found that the average monthly wage business owners had to pay each employee from January to April this year was 2.91 million won, up 10.4 percent from 2021. The average monthly net income for the owners, on the other hand, was 2.81 million won.

The survey "clearly proved how the minimum wage is sucking the life out of the country's small business owners," Oh Sae-hui, president of KFME, said. She said the minimum wage should not be increased in 2024 and it should also be implemented with higher priority to certain industrial sectors instead of being implemented universally.

aoshima11@koreatimes.co.kr