Small Business Owners: "Minimum Wage Increase Will Lead to Significant Job Losses"

Criticism of 'Employment Barriers' Due to 2.5% Minimum Wage Increase
Considering Various Measures Including Objections

The small business sector criticized the 2.5% increase in next year's minimum wage on the 19th, calling it a 'small business employment barrier.'

The Korea Federation of Small and Medium Business (KSMB) stated in a press release that "this minimum wage increase decision will deepen the 'solo management' of small business owners, ultimately causing a significant loss of workers' jobs." KSMB has been urging a freeze on the minimum wage, considering cost structures and economic conditions.

Small business owners, including Oh Se-hee, president of the Korea Federation of Micro Enterprise, are holding a press conference to announce the 2024 minimum wage demand proposal at the Korea Federation of Micro Enterprise in Yeouido, Seoul, on April 12. Photo by Hyunmin Kim kimhyun81@

Furthermore, KSMB emphasized, "The Minimum Wage Commission has raised the minimum wage by a staggering 52.4% over the past seven years, an 'excessive increase.' The result of this uncontrolled rapid increase has led to 'employment reduction,' which is expected to worsen next year."

KSMB also pointed out, "According to a survey conducted by KSMB, the average annual operating profit growth rate of small business owners over the past few years was only 1.6%, while labor cost growth reached 3.7%. As a result, from January to April this year, the average monthly operating profit of small business owners was 2,817,000 KRW, whereas the average monthly labor cost paid was 2,910,000 KRW, meaning small business owners are already paying more in labor costs than their operating profits."

KSMB claims that the rise in labor costs leads to an increase in 'small business owners without employees.' They explained, "If the minimum wage increases next year, 58.7% expect to reduce new hires, 44.5% to cut existing staff, and 42.3% to shorten working hours of current employees in order to operate their businesses."

They also criticized the failure to apply differentiated minimum wages by industry. KSMB stated, "Despite the employer representatives proposing a concession to limit differentiated application to industries in critical situations such as lodging and food services (excluding detailed categories like hotel business, resort condo operations, and institutional cafeterias), chain convenience stores, and taxi transportation, considering social concerns and practical difficulties, this was ignored."

Then, KSMB urged the government, saying, "The government must keep in mind that if support measures for small business owners who find it difficult to pay the increased minimum wage are not promptly prepared, a domino effect could lead to a total tragedy where many industries eventually close, starting with these sectors."

The Minimum Wage Commission decided on the next year's minimum wage at 9,860 KRW per hour after overnight discussions at the Government Sejong Complex from the previous day to this day. Converted to a monthly salary (based on 209 hours), it amounts to 2,060,740 KRW. This is 2.5% higher than this year’s rate (9,620 KRW per hour; 2,010,580 KRW monthly).

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