57% of SMEs Say "Freeze or Cut Minimum Wage Next Year"... Smaller Businesses Suffer More Pain

"Minimum Wage This Year Must Prioritize Business Condition Recovery and Employment Retention"

[Asia Economy Reporter Yu Je-hoon] A survey found that 6 out of 10 domestic small and medium-sized enterprises (SMEs) feel that next year's minimum wage should be frozen or lowered. In particular, the smaller the company, the stronger the voice calling for freezing or lowering the minimum wage.

The Korea Employers Federation and the Korea Federation of SMEs announced on the 25th that they conducted a "Survey on Employment Difficulties and Minimum Wage Opinions of SMEs" targeting 600 SMEs employing workers at the minimum wage level from the 10th to the 18th, and the results showed this trend.

According to the survey, 50.8% of all companies responded that the minimum wage should be frozen, and 6.3% said it should be lowered, totaling 57.1% for freezing or lowering. Following these were a 2-3% increase (21.3%), about a 1% increase (17.5%), and others.

There was a clear polarization by the number of employees. Companies with 1-9 employees showed 72.1% in favor of lowering (8.9%) or freezing (63.2%), whereas companies with 100-300 employees had only 42.5% supporting lowering or freezing.

Regarding the current minimum wage level (8,720 won), 35.3% felt it was high, and 58.7% thought it was appropriate. However, in non-manufacturing industries (39.0%) and companies with fewer than 10 employees (42.2%), the opinion that it was high was relatively more prevalent.

As for responses to a minimum wage increase, 41.0% of respondent companies chose employment reduction (12.8% reducing existing staff, 28.2% reducing new hires), and 35.2% said they had "no countermeasures," indicating concerns that a minimum wage increase could lead to employment decline.

Meanwhile, in the same survey, 68.2% of SMEs responded that their current business situation has worsened compared to before COVID-19. Especially in non-manufacturing industries, 75.6%, and companies with fewer than 10 employees, 79.4%, reported deterioration, showing significant differences by industry and size.

Additionally, due to management difficulties caused by COVID-19, 47.8% of companies took out additional loans, and 38.0% had employees who took leave, were on furlough, or resigned. Companies currently struggling to pay wages normally accounted for 40.2%, with non-manufacturing (48.3%) and companies with fewer than 10 employees (55.6%) reporting relatively greater difficulties in this area.

Regarding the expected recovery period for current management and employment difficulties, 51.7% responded that it would take more than a year (35.0%) or that recovery would be difficult for a long time (16.7%). Those who answered "don't know" accounted for 25.3%.

Ryu Ki-jung, Executive Director of the Korea Employers Federation, said, "The recovery from last year's economic shocks such as COVID-19 is becoming increasingly unbalanced, differentiated by industry and company size. Since small and micro enterprises inevitably recover more slowly, it is necessary to prioritize improving business conditions and maintaining jobs based on a stable minimum wage policy this year as well."

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