3 out of 4 Domestic Companies Say "Next Year's Minimum Wage Should Be Frozen or Lowered"

KIAF 'Survey on Management Difficulties Due to Minimum Wage Impact' Results

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] More than seven out of ten domestic companies believe that next year's minimum wage should be frozen or lowered. In particular, the consensus on the 'freeze' was formed not only among executives such as CEOs and directors but also among general employees below the manager level.

The Korea Industrial Alliance Forum (KIAF) announced on the 20th that it conducted a "Minimum Wage Impact Management Difficulty Survey" targeting 168 domestic companies from the 22nd to the 30th of last month, and the results were compiled as such. The surveyed companies belong to KIAF and the Automobile Industry Association. ▶Related article page 6

First, regarding the increase in next year's minimum wage, 48.4% responded that it should be frozen, which was the highest. Additionally, 26.1% responded that it should be lowered. This means that 74.5% of companies judged that next year's minimum wage should be frozen or reduced.

In particular, the call to freeze the minimum wage showed little difference by rank. Unlike past evaluations of the minimum wage level, 47.7% of CEOs and executives, as well as 46.4% of employees below the manager level, responded that it should be frozen, which was the highest.

Regarding the recent rapid minimum wage increase, 73.7% of responding companies evaluated that it had a 'negative (very negative 32.9%, somewhat negative 40.7%)' impact on management performance such as sales and operating profit. Among the surveyed companies, 55.4% responded that sales decreased in the first quarter of this year, and 63.1% said operating profit decreased.

As a response to the minimum wage increase, 33.3% of companies chose "minimizing wage increases and welfare benefits for general employees" as the most common method. Other responses included workforce reduction and reduction of new hires (32.2%), minimizing overtime work (27.8%), and business withdrawal or overseas relocation (6.7%). KIAF explained that "the rapid increase in the minimum wage, contrary to the purpose of the system, may lead to employment reduction or a decrease in workers' real income, thereby exacerbating income polarization."

Regarding improvements to the minimum wage system, proposals included regional and industry-specific differentiation (46.9%), mid- to long-term decision cycles (42.2%), and changing the decision-making body to the National Assembly (10.9%). Chung Man-ki, chairman of KIAF, stated, "While guaranteeing the minimum wage for low-wage workers, the related system should be improved to minimize conflicts between labor and management."

This content was produced with the assistance of AI translation services.