S. Korea's state-run economic think tank warns against rapid minimum wage hike
- 6 years ago
South Korea's state-run economic institute is sounding the alarm about the government's rush to raise the minimum wage.
The Korea Development Institute says,... if the current rate of increase continues,... it'll mean more job losses and fewer hours for those still in work.
Choi Si-young reports.
The Korea Development Institute has warned that increases in the minimum wage due to take effect in 2019 and 2020 could result in job losses.
The think tank projects that a 15% wage increase over the next two years could potentially lead to the loss of nearly 100-thousand jobs in 2019... and 140-thousand the following year.
Those wage increases would come on top of the Moon administration's 16-percent hike enacted this year, which brought the minimum up from about 6 U.S. dollars an hour to 7.
The institute highlighted similar difficulties in France,... which stopped raising its minimum wage in 2005 once it had reached 60% of the median wage... because higher pay made it harder for low-wage earners to find employment.
Korea's minimum wage in 2018 is already at 55% of the median.
The report conceded that its estimates are based on the case of another foreign country, Hungary, where the wages were increased by 60% between 2000 and 2004.
It also said it did not factor in government support for small businesses, which are usually hit hardest by higher minimum wages.
The KDI's report comes after the Blue House released figures that said the effects of the minimum wage hike were 90% positive.
However, the top office has come under fire for having made that calculation based on individual income, rather than household income, and for excluding figures for the unemployed and the self-employed.
The Korea Development Institute stressed that the minimum wage increase has so far had few side effects.
But, it warns that the government should monitor the effects of increases closely over the coming years.
Choi Si-young, Arirang News.
The Korea Development Institute says,... if the current rate of increase continues,... it'll mean more job losses and fewer hours for those still in work.
Choi Si-young reports.
The Korea Development Institute has warned that increases in the minimum wage due to take effect in 2019 and 2020 could result in job losses.
The think tank projects that a 15% wage increase over the next two years could potentially lead to the loss of nearly 100-thousand jobs in 2019... and 140-thousand the following year.
Those wage increases would come on top of the Moon administration's 16-percent hike enacted this year, which brought the minimum up from about 6 U.S. dollars an hour to 7.
The institute highlighted similar difficulties in France,... which stopped raising its minimum wage in 2005 once it had reached 60% of the median wage... because higher pay made it harder for low-wage earners to find employment.
Korea's minimum wage in 2018 is already at 55% of the median.
The report conceded that its estimates are based on the case of another foreign country, Hungary, where the wages were increased by 60% between 2000 and 2004.
It also said it did not factor in government support for small businesses, which are usually hit hardest by higher minimum wages.
The KDI's report comes after the Blue House released figures that said the effects of the minimum wage hike were 90% positive.
However, the top office has come under fire for having made that calculation based on individual income, rather than household income, and for excluding figures for the unemployed and the self-employed.
The Korea Development Institute stressed that the minimum wage increase has so far had few side effects.
But, it warns that the government should monitor the effects of increases closely over the coming years.
Choi Si-young, Arirang News.