[Editorial] Consider the self-employed

Labor reps to demand 24 percent hike in the minimum wage for 2022

The labor sector on Thursday revealed their initial demand for 10,800 won ($9.57) per hour as the minimum wage for next year.

This is 2,080 won or 23.9 percent more than the minimum wage for this year.

Labor representatives on the Minimum Wage Commission disclosed their first demand proposal, but have not submitted it to the commission yet. The panel is set to receive the first proposals from both management and labor representatives on Tuesday. Management representatives have not disclosed their proposal yet.

The labor demand is too high, even considering that it is the first proposal and that this is the last year to achieve President Moon Jae-in’s election pledge to raise the minimum wage to 10,000 won per hour.

About 5.5 million businesses run by self-employed people, who are usually heavily affected by the minimum wage, are experiencing economic difficulty due to the coronavirus pandemic. Their sales have already suffered, and if they are dealt a double blow by a heavier wage burden, a chain of their business closures and job losses will be inevitable.

The labor circle says that the rate of increase in the minimum wage was low for the past two years -- 2.9 percent for last year and 1.5 percent for this year.

But it had risen steeply for the preceding two years -- 16.4 percent for 2018 and 10.9 percent for 2019. Moon’s pledge to raise the hourly minimum wage to 10,000 won during his presidency played a big part. But the rate of increase had to be reduced for the following two years because of serious side effects of sharp rise in the minimum wage.

Even if the minimum wage for the past two years rose relatively slowly, it has increased 34.8 percent in four years under the current administration. The minimum wage went up from 6,470 won in 2017 when the Moon government was launched to 8,720 won this year.

The labor sector argues that the life of low-income workers has worsened due to the pandemic crisis.

But the same is true of micro-enterprises and small self-employed businesses.

A survey conducted by the Korea Economic Research Institute last month shows that 32.3 percent of self-employed people say they are in a situation where they are forced to consider closing their business due to economic difficulties. A survey by Korea Federation of Micro Enterprises, the results of which were released on June 1, found that 43.8 percent of micro-enterprises are currently considering closure. These are ascribable to the overlap of the coronavirus impact on the sudden rise of the minimum wage.

Nonetheless, the labor sector demands a 24 percent hike. It seems to be determined to turn its back on micro-enterprises and self-employed shopkeepers, no matter how dire their circumstances are.

According to the Korea Federation of SMEs, if the minimum wage rose to 10,000 won, 560,000 jobs will likely vanish. If this happens, more than 1 million workers and their families will have difficulties making a living.

According to Statistics Korea, the number of self-employed people with employees decreased by 67,000 in May from a year earlier, while that of the self-employed without employees increased by 53,000. This indicates that many self-employed people laid off their workers or closed down

The labor sector’s demand for a steep hike of the minimum wage is as good as a declaration to poor self-employed people and their employees that they will drive them into a blind alley.

It is questionable if it aims at giving more benefits of higher wages only to high-salaried employees of large companies.

If the labor circle cares even a bit about self-employed businesses and micro-enterprises, it cannot demand a steep rise in the minimum wage again. It is right to minimize the rate of increase in the minimum wage for next year. And it must also try to seek ways to help them substantially.

By Korea Herald(koreaherald@heraldcorp.com)