Small Business Owners: "Minimum Wage Increase 'Adding Insult to Injury'... Crisis Will Deepen"

2022 Minimum Wage 9,160 Won... 5.1% Increase from This Year
"Serious Regret and Disappointment... Concerns over Small Business-Led Economic Crisis"
Self-Employed Borrowers Up 24.6% in One Year... Store Closures Up 240%
Criticism of Minimum Wage Decision Structure... "Fundamental Reform Needed Including Strengthening Representation"

[Image source=Yonhap News]

[Asia Economy Reporter Lee Junhyung] As the minimum wage for next year was decided at 9,160 won, a 5.1% increase from this year, small business owners raised their voices of criticism.

The Korea Federation of Small and Medium Business (KSMB) emphasized in a statement on the 13th, "We have expressed the position and expectation that the minimum wage for 2022 should at least be frozen, but we express serious regret and disappointment at this increase that exceeds expectations." They continued, "With the elevation of social distancing to Level 4 in the metropolitan area, effectively imposing lockdown measures, small business owners are taking a severe direct hit due to business suspensions and restrictions," adding, "With this minimum wage increase, expanding employment is out of the question, and even maintaining current employment levels is impossible."

The KSMB also expressed concerns about the economic crisis originating from small business owners. They stated, "Including the mandatory weekly holiday pay, the minimum wage has increased by more than 50% under the current administration," and "This minimum wage increase will further deepen the crisis of the Korean economy originating from small business owners." They added, "Small business owners have no choice but to survive by borrowing more debt," and "It is expected to act as a catalyst for a vicious economic cycle, including rising costs, job losses, increased loans for self-employed individuals, and increased business closures."

In fact, the situation for small business owners is worsening. According to the Bank of Korea and others, the number of self-employed individuals who took out loans last year was 2,384,000, a 24.6% increase compared to 1,910,000 in 2019. The number of store demolition support cases surged by more than 240%, from 4,583 in 2019 to 11,535 last year. Additionally, in a survey conducted by the KSMB earlier this month targeting 1,026 small business owners, 87.2% of respondents answered that "it is difficult to pay labor costs if the minimum wage increases."

The KSMB also criticized the minimum wage decision structure. They stated, "Even in such difficult times, we fundamentally question the current decision structure that pursues unreasonable minimum wage increases every year," and "We once again urge the government and the National Assembly to fundamentally reform by implementing biennial minimum wage decisions, differentiating minimum wages by small business industry and size, evaluating the payment capacity of small business owners, and strengthening the representation of small business owners."

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