As negotiations for next year's minimum wage intensify, labor groups are demanding an hourly wage of 12,000 won, which is over 16% higher than this year's minimum wage of 10,320 won. From the labor perspective, this demand is reasonable. The cost of living has risen, with increased burdens from rent and utility bills. It is undeniable that the lives of minimum wage workers are becoming increasingly difficult.
However, there is a recurring question that often gets overlooked in the minimum wage debate: Who will bear the cost of wage increases?
When the minimum wage rises, workers' incomes increase. However, someone must shoulder that cost. Large corporations may absorb some of the expenses through improved productivity or economies of scale. The problem lies in the reality of our economy, where most domestic businesses are small enterprises and self-employed individuals. Convenience stores, restaurants, cafes, neighborhood markets, and small manufacturers account for a significant portion of employment in South Korea.
In recent years, self-employed individuals have faced significant challenges. The lingering effects of COVID-19, coupled with high interest rates and inflation, have led to prolonged consumer sluggishness. While rent, electricity, and food prices have steadily increased, many businesses have struggled to recover their previous sales levels.
In this context, a substantial increase in the minimum wage leaves business owners with limited options. They may raise prices, reduce working hours, forgo new hiring, or ultimately choose to close their businesses. It is no longer uncommon to see storefronts with 'For Rent' banners displayed.
Each time the minimum wage debate arises, we often approach it as a confrontation between workers and employers. However, the reality is more complex. The relationship between a local restaurant owner and a part-time worker differs from that between a conglomerate and a labor union. Many self-employed individuals work over 12 hours a day yet earn less than salaried employees. They too are vulnerable and concerned about their survival.
Ultimately, the current minimum wage debate resembles a conflict between the vulnerable rather than a simple confrontation between opposing sides. Workers demand higher wages, while self-employed individuals express that they can no longer endure the pressure. Both sides have valid points. The issue is that the state is shifting the burden it should address onto the weakest links in the market.
A more fundamental issue is productivity. Wages can only sustainably rise when supported by productivity. Countries like the United States and Germany maintain high wages due to their high labor productivity. Conversely, if wages are increased through policy without productivity improvements, the burden falls squarely on small businesses.
There is no reason to oppose the increase in the minimum wage itself. Workers' lives must be protected, and the issue of low wages must be addressed. However, engaging in a numbers game without considering the economic realities and the pace that the economy can handle is not advisable. The minimum wage should be a system that protects the socially vulnerable, not one that sacrifices another group of vulnerable individuals.
The Minimum Wage Commission should not only consider whether an hourly wage of 12,000 won is appropriate but also examine the potential impacts of that figure in the real world and who will bear the costs. While the livelihoods of workers are important, the survival of self-employed individuals is also a critical social value.
The South Korean economy is currently grappling with a trifecta of challenges: sluggish domestic demand, weak consumer spending, and high interest rates. In such times, what is needed is not mere slogans but a sense of balance. The minimum wage is not just a number; it is a matter of people. And among those people are not only workers but also countless small business owners and self-employed individuals who open their shops each day, often with a sigh.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.