Full Effort to Discover Policy Tasks for SMEs and Small Business Owners... Will the Frozen Livelihood Economy Thaw?

Korea Federation of SMEs and Small Business Owners Announce Policy Tasks
Call for "Realization of the Minimum Wage" and "Restructuring of the Electricity Tariff System"

Ahead of the 21st presidential election, small and medium-sized enterprises (SMEs) and small business owners are accelerating efforts to identify policy tasks for the next administration. To overcome the frozen livelihood economy caused by the Trump-induced tariff war, high exchange rates, and structurally stagnant domestic demand, their top priorities are the 'realization of the minimum wage' and the 'restructuring of the electricity tariff system.'

In the economic downturn, there are no people visiting Hwanghak-dong Kitchen Street in Jung-gu, Seoul, to start businesses. Photo by Jo Yong-jun

According to the related industries on the 15th, the Korea Federation of SMEs announced 100 policy tasks based on three major agendas: sustainable jobs, manufacturing revival, and economic ecosystem circulation, through the 'Suggestions from the SME sector to the 21st presidential candidates' released the day before. The Korea Federation of Small and Medium Business (KOSME) held a policy advisory committee on the 11th to review policy tasks to be delivered to the major political parties' next presidential election camps. KOSME presented the agendas of crisis recovery, alleviation of unfairness, innovative growth, establishment of social safety nets, and strengthening of private sector capabilities.

The detailed issue that these organizations, representing SMEs and small business owners respectively, commonly put forward first is the realization of the minimum wage. This is interpreted as a result of the increased management difficulties faced by SMEs and small business owners who lack the capacity to pay, as the minimum wage exceeded 10,000 won for the first time in 2025.

As a concrete alternative, they argued that 'the company's ability to pay' should be added as a criterion for determining the minimum wage and that differentiated implementation by industry should be carried out. They also requested the introduction of a new minimum wage determination method, moving away from the current 'tripartite committee' (9 labor representatives, 9 management representatives, and 9 public interest members).

A representative from the Korea Federation of SMEs said, "Until now, the minimum wage has been discussed focusing on stabilizing the livelihoods of low-wage workers, but now that the minimum wage has risen to a certain level, there is a growing need to consider companies' employment capacity, economic conditions, and employers' ability to pay. Under the current system, productive discussions on the minimum wage are impossible, so we need to verify the effectiveness of various measures, including government intervention."

They also spoke with one voice regarding the restructuring of the electricity tariff system. This is due to the serious burden of electricity costs on foundational industries such as manufacturing, which require 24-hour electricity usage, following an average 9.7% increase in industrial electricity rates per kWh in October last year.

The SME sector proposed as a specific reform plan for the electricity tariff system the 'relaxation or abolition of the basic charge peak-linked calculation period.' Currently, the basic charge is imposed based on the maximum annual power consumption, and the proposal is to ease this by applying it quarterly or monthly. They also requested the establishment of upper and lower limits for the climate environment charge to alleviate the electricity cost burden. Electricity charges mainly consist of the basic charge, power consumption charge, climate environment charge, and fuel cost adjustment charge. While the fuel cost adjustment charge has an upper limit of 5 won per kWh, there is no upper limit for the climate environment charge.

Small business owners proposed a new solution called the 'establishment of a dedicated tariff system.' Currently, electricity rates are divided into residential, industrial, and general use categories. Small business owners are subject to the general use electricity rate, which has the highest sales price among these. KOSME argued, "A contract type for industrial energy vulnerable groups should be established, focusing on businesses that use a lot of electricity such as PC rooms, lodging, and food service industries."

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