"When Wages Rise, What Good Is It?"... Young Part-Time Workers Earning Less Than Minimum Wage 'Wear a Sad Face'

Next Year's Minimum Wage 9,160 Won... "3 out of 10 Young Part-Timers Don't Receive Minimum Hourly Wage"
Work Hour 'Splitting' Tricks to Avoid Weekly Holiday Pay Also Widespread
Experts Say "Minimum Wage Alone Can't Overcome Social Issues... Must Combine with Other Economic Measures"

The minimum wage increased by 5.1% to 9,160 won, but it was found that many part-time workers do not receive the minimum wage properly.
[Image source=Yonhap News]

[Asia Economy Reporter Park Hyun-joo] #. Choi (24), a university student living in Busan, works at a convenience store earning 7,000 won per hour. This amount is even below the minimum wage standard of 7,530 won set three years ago (2018), but since it was agreed upon when contracting with the store manager, Choi finds it difficult to ask for a raise. Moreover, the manager has been complaining that "these days, it's tough because of COVID-19," so Choi hesitates to bring up the topic of a wage increase.

Despite the 5.1% increase in the minimum wage to 9,160 won amid the fourth wave of COVID-19, many part-time workers (alba-saeng) are still not guaranteed even this amount. It has also been revealed that 'split' employment, where employers try to avoid paying weekly holiday allowances citing business difficulties, is widespread.

According to a survey, 3 out of 10 young part-time workers are not guaranteed the minimum hourly wage. Last month, Youth Union surveyed 432 workers aged 39 and under, finding that 27.8% received wages below this year's legal minimum wage of 8,720 won. This is more than double the 11.7% minimum wage violation rate found in the same survey last year.

Other surveys support this reality. On the 15th, according to data received by Kim Woong, a member of the People Power Party, from the Minimum Wage Commission, 1 in 5 workers in their 20s (18.4%) last year were not guaranteed the minimum wage. It was also found that 6.8% of workers in their 30s received wages below the minimum wage last year.

Among young people who have worked part-time jobs, stories of earning below minimum wage are common. Job seeker A (26) worked at a local bakery until last year without being guaranteed the minimum wage but moved to a franchise bakery this year.

A said, "There's a saying that even a servant should work at a nobleman's house. The same goes for part-time jobs," adding, "At least large franchises make sure to pay minimum wage and weekly holiday allowances, so this is a joke that comes out."

B (28), a first-year office worker with experience in various part-time jobs such as parcel loading/unloading, convenience stores, and tutoring, said, "When I asked the PC room owner to match the minimum wage, he responded, 'I don't understand wanting to get paid more while doing such an easy part-time job,' which was absurd," adding, "It seems the concept of 'minimum' in minimum wage differs between employers and employees."

Weekly holiday allowance is a 'pipe dream.' According to the Youth Union survey, 8 out of 10 young part-time workers (82.6%) do not receive weekly holiday allowances. Some employers split working hours to less than 15 hours to avoid paying these allowances, citing business difficulties after COVID-19.

C (25), who works at a hamburger franchise, said, "I used to receive weekly holiday allowances, but from this year, the manager said, 'Because the store is struggling due to COVID-19, we probably can't pay weekly holiday allowances, so let's split working hours.' I've worked at this store for three years, so I agreed not to receive the allowance out of loyalty to the manager."

In the early morning of the 15th, members of the National Self-Employed Emergency Committee held a one-person car protest with hazard lights on around Marronnier Park in Jongno-gu, Seoul, opposing the government's 'Level 4 Social Distancing Measures.' [Image source=Yonhap News]

However, employers also have their reasons. They claim that business is difficult due to minimum wage increases and economic hardships. The COVID-19 Response National Self-Employed Emergency Countermeasures Committee (Emergency Committee), a coalition of self-employed groups by industry, took to the streets on the 14th to demand the lifting of gathering bans under social distancing level 4 and compensation payments.

At a press conference that day, Kim Ki-hong, co-representative of the Emergency Committee, said, "Self-employed people are closing their businesses and drowning in debt, but the government still hasn't discussed how to compensate," urging, "Implement new social distancing, abolish gathering restrictions, and compensate for losses."

Given this situation, some young people even voice opposition to minimum wage increases. While they agree with the intention to raise the minimum wage, they point out that employment decreases and the resulting damage is borne entirely by workers.

University student D said, "Raising the minimum wage is good, but we also need to consider the self-employed's position," adding, "Aren't there daily news reports about downtown areas being empty due to COVID-19? It's the self-employed, not the government, who pay the minimum wage."

In fact, while the number of self-employed people has increased, those with employees have decreased. According to the Small and Medium Business Research Institute and Statistics Korea on the 15th, as of last month, there were 5.58 million self-employed people, an increase of 29,000 compared to the same month last year. Among them, 1.28 million had employees, a decrease of 83,000 from the same month last year. This marks 31 consecutive months of decline in self-employed people with employees since December 2018.

However, research results refute such claims. Although it is true that minimum wage increases lead to higher labor costs, making it difficult for self-employed people with employees, the claim that minimum wage reduces employment rates among the self-employed lacks evidence.

According to a paper titled "The Impact of Minimum Wage on Income Distribution, Income, Consumption, and Employment" by Moon Young-man, a research fellow at Pukyong National University's Employment and Human Resources Development Institute, the minimum wage rose by 16.4% (from 6,470 won to 7,530 won) in 2018, but the number of self-employed people with employees increased by 0.2% compared to the previous year. The proportion of low-wage workers also dropped to 17.9%, with a significant decrease among temporary and daily workers who are most affected by minimum wage changes.

In this regard, civic groups emphasized the need for practical government measures. The Youth Union stated, "Social discussions for real institutional improvements such as ordinary wages and weekly holiday allowances have not progressed," adding, "Labor and civil society were not sufficiently prepared to persuasively publicize the reality of unstable labor faced by vulnerable workers and to create necessary institutional changes."

They continued, "With one million ultra-short-time workers, the increase in platform labor and freelance employment, and growing inequality after COVID-19, improvements in various systems including the minimum wage are urgently needed," urging discussions on institutional reforms.

Experts also accepted such criticism. Park Joon-sik, chairman of the Minimum Wage Commission and professor at Hallym University, said, "We have to admit that the reality did not support the government's enthusiasm for increases during the first two years."

He pointed to wage disparities in the labor market as an obstacle to minimum wage policies. Professor Park explained, "The biggest difficulty regarding minimum wage is that wage disparities in Korea's labor market are significantly increasing. Overcoming the widening gap between industries hit hard by the COVID-19 pandemic and others cannot be achieved by the minimum wage system alone," adding, "Since the minimum wage's function has limits in overcoming major social challenges, economic measures must be comprehensively combined."

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