SMEs raise concerns about next year’s minimum wage

[Photo by Yonhap]

South Korean organizations representing small and medium-sized enterprises (SMEs) and small business owners expressed regret on Friday over the latest decision on next year’s minimum wage, saying that the 10,030 won ($7.29) per hour setting would place them in an even more challenging situation.

“For small business owners, there is a significant difference between the minimum wage of 9,860 won this year and the 10,030 won set for next year,” said a senior official from the Korea Federation of Micro Enterprise (KFME).

“In a situation where the risks of delinquency, closure, and increased borrowing continue to grow, this decision blocks a path for vulnerable workers and small business owners to coexist,” he said. “It is particularly shocking for the most vulnerable small business owners.”

Lee Myung-ro, head of the personnel policy division at the Korea Federation of SMEs (KBIZ) and an employer representative of the Minimum Wage Commission under the Ministry of Employment and Labor, also said that ”the SME community does not welcome the decision as it has requested a freeze (in the hourly wage).”

“The absolute level of the minimum wage has already increased and accumulated significantly, making even a slight increase very challenging.“

An official from the Korea Restaurant Association said: ”It is already difficult to find people in the food service industry, and we are paying hourly wages of 11,000 to 12,000 won. With the minimum wage exceeding 10,000 won, we may have to pay 13,000 to 14,000 won.”

“Many businesses are reducing their staff or operating hours due to the burden of labor costs, which will likely continue, causing inconvenience for customers and disrupting the economy,“ the official added.