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(EDITORIAL from Korea Times on June 6)

2018/06/06 09:37

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Minimum wage hike

Moon's pledge keeps triggering concerns over job cuts

President Moon Jae-in's economic policies have triggered much controversy, particularly the hourly minimum wage. The Moon administration raised the minimum wage to 7,530 ($7) won per hour this year, a 16.4 percent hike from 6,470 won in 2017. President Moon has pledged to raise the minimum wage to at least 10,000 won by 2020.

It is hard to contest the need to raise the minimum wage when considering the need to support low-income earners who are struggling with rising living costs. The business sector, however, has raised concerns on rising labor costs, which is feared to affect their hiring plans and hurt employment.

Even a state-run think tank has raised the need to adjust the speed of the minimum wage hike under the Moon administration. The Korea Development Institute (KDI), a research institute under the Ministry of Strategy and Finance, warned against possible negative repercussions from raising the minimum wage at an excessive pace in a press conference Monday.

The KDI's latest report said a yearly 15 percent hike in the minimum wage to achieve the President's pledge of 10,000 won by 2020 will result in considerable job losses. It estimated with 15 percent hikes to the minimum wage over the next two years, there will be 96,000 job cuts in 2019 and 144,000 in 2020.

The problem is that the President and Cheong Wa Dae seem to have an overly optimistic view of the minimum wage hike. President Moon said recently during a Cabinet meeting that much of the working population had benefited from his so-called income-led growth initiative and the minimum wage increase. But there is a discrepancy in the President's view and what is actually happening. The latest Statistics Korea report showed the monthly average income of the bottom 20 percent income bpokesman Kim Eui-kyeom even blamed past governments for Korea's protracted economic slump, marked by falling national income and low economic growth. But blaming past governments only undermines the public's belief in the incumbent administration to deal with the job crisis and the widening income disparity. racket had dropped 8 percent year-on-year to 1.28 million in the January to March period.

The KDI report should be a reminder for the Moon administration to check the feasibility of the President's minimum wage hike and make adjustments to deal with adverse effects.

(END)

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