7 out of 10 Small Business Owners Say "Already Burdened by This Year's Minimum Wage"

Half of Small Business Owners "Hope for Minimum Wage Freeze Next Year"
75.6% Have No Capacity for New Hiring
"System Must Be Improved... Differential Application by Business Size and Industry"

Due to the strengthened social distancing measures amid the spread of COVID-19, the worries of self-employed business owners are deepening. On the 23rd, a rental notice was posted at a store located on Samcheong-dong street in Jongno-gu, Seoul. This area used to be bustling with foreign tourists even on weekdays, but with the global spread of COVID-19 blocking air routes, the number of foreign tourists has sharply declined. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Junhyung Lee] Seven out of ten small business owners (74.1%) reported already feeling burdened by this year’s minimum wage, according to a recent survey.

The Korea Federation of Small and Medium Business (KOSME) announced on the 1st that a survey titled "2022 Minimum Wage Impact on Small Business Owners" was conducted from the 20th to the 25th of last month targeting 521 general small business owners, revealing these findings. According to the survey, 75.3% of small business owners responded that the minimum wage affects their business management situation.

The perceived impact of the 2021 minimum wage on small business owners. [Photo by Small Enterprise Association]

About half of the small business owners (46.3%) hoped that next year’s minimum wage would remain frozen. Meanwhile, 45.7% wished for a reduction in the minimum wage, and only about 8% hoped for an increase. The desired reduction levels were '5?10% decrease' (41.6%) and '1?5% decrease' (23.1%) in that order.

Additionally, 75.6% of small business owners responded that regardless of whether the minimum wage increases, they do not have the capacity to hire new employees. 12.3% said they would give up on new hiring if the minimum wage increased by 1?5%. KOSME explained that small business owners are already feeling employment limits at the current minimum wage level, regardless of the decision on minimum wage increases.

A considerable number of small business owners were also considering staff reductions. 44.9% of small business owners answered that they are currently considering laying off existing employees. Those considering business closure currently accounted for 43.8%. Only 20.5% responded that they do not consider closure regardless of minimum wage increases.

The Need for Improvement in the Current Minimum Wage System.
[Photo by Small Enterprise and Market Service]

There were also opinions that the minimum wage system needs improvement. More than eight out of ten small business owners (83.3%) responded that the current minimum wage system should be improved. Additionally, 77.2% pointed out that small business owners’ opinions are not reflected in the minimum wage decision-making process.

The most urgent issue to be improved was 'differential application by business size and industry,' which accounted for 53%. This was followed by 'expansion of support for minimum wage increases for small business owners' (35.1%) and 'differential application by business region and industry' (29.4%).

Chan-nam Suh, Head of Policy and Public Relations at KOSME, said, "Small business owners have been feeling the burden of labor costs due to the increased minimum wage. Since small business owners recognize the need to improve the minimum wage system, comprehensive measures considering their payment capacity must be established."

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