April 27, 2024

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[THE INVESTOR] Korea’s chief economic policymaker said on Jan. 22 that the government will make efforts to facilitate a “soft landing” of the recent minimum wage hike.

The government hiked the minimum wage by 16.4 percent, to 7,530 won (US$7.04), as of Jan. 1 this year, marking the biggest jump in about two decades.

The Moon Jae-in administration has pledged to raise the minimum wage to 10,000 won before Moon‘s single five-year term ends in 2022.

Although the minimum wage hike is one of the government’s strategies to boost private consumption and narrow the income gap, small and medium-sized businesses have expressed concerns about higher labor costs.

The government has earmarked 3 trillion won to reduce the burden on smaller firms that hire part-time workers.

In a speech at a forum, Finance Minister Kim Dong-yeon said smaller firms and shops are struggling with the minimum wage hike.

“Through various measures, such as indirect support schemes, the government will help the minimum wage hike make a soft landing,” he said.

The minister stressed that the minimum wage hike would help jack up households’ disposable income and consequently raise private spending as well.

The finance minister said the country‘s minimum wage hike would be set at a reasonable level, hinting that the pace of the minimum wage increase may be adjusted in order to minimize possible fallout.

By Alex Lee and newswires (alexlee@heraldcorp.com)