FedChamber: "If Minimum Wage Rises to 10,000 Won, 69,000 Jobs Will Decrease"

Report on the Impact of Minimum Wage Increase on Employment

There is a claim that if the minimum wage is raised to 10,000 won, up to 69,000 jobs could be lost.

On the 26th, the Federation of Korean Industries (FKI) analyzed the job loss effects under different scenarios of next year's minimum wage increase through the report "The Impact of Minimum Wage Increase on Employment (2023)" commissioned to Professor Choi Nam-seok of Jeonbuk National University.

It predicted that if next year's minimum wage rises from 9,620 won to 10,000 won (3.95%), at least 28,000 to a maximum of 69,000 jobs will be lost. This corresponds to 8.9% to 22.0% of the average number of new jobs created over the past five years (2018?2022), which was 314,000. If the minimum wage is raised to 12,210 won (26.9%) as demanded by labor groups, the job loss could increase to a minimum of 194,000 and a maximum of 470,000.

In particular, it was analyzed that the increase in minimum wage would further enlarge the job loss among vulnerable groups such as youth, low-income earners, and small-scale businesses. Among youth (ages 15?29), if the minimum wage is raised to 10,000 won, jobs are expected to decrease by at least 15,000 to a maximum of 18,000, and if raised to 12,210 won as per labor demands, by at least 101,000 to a maximum of 125,000.

Additionally, for low-income earners (based on the second income quintile), jobs are expected to decrease by at least 25,000 to a maximum of 29,000 if the minimum wage reaches 10,000 won, and by at least 207,000 to a maximum of 247,000 if it reaches 12,210 won as per labor demands.

Since vulnerable groups such as youth, low-income earners, and small-scale businesses have a relatively high proportion of workers subject to the minimum wage, the impact of minimum wage increases on job losses is significant. The FKI explained, "The minimum wage has surged by 48.7% over the past six years, and recently, companies are experiencing severe management difficulties due to the economic downturn, so an additional increase in the minimum wage could severely damage jobs among vulnerable groups."

Professor Choi Nam-seok said, "Recently, small businesses are facing difficulties such as decreased sales and increased inventory due to the severe economic downturn," adding, "If the minimum wage is further increased, there is a concern that management difficulties will worsen."

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