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(EDITORIAL from the Korea Times on April 9)

All News 09:37 April 09, 2016

Debate on minimum wage
Find win-win result for workers, businesses

In the final lead-up to the April 13 parliamentary vote, the minimum wage has become a key election phrase with the rival parties. The ruling Saenuri Party is telling voters that it will seek to raise the minimum wage to more than 9,000 won per hour by 2020, while the main opposition Minjoo Party of Korea is offering 10,000 won by the same year. The Justice Party is pledging 10,000 won by 2019.

The parties' sudden enthusiasm for the minimum wage comes on the back of a series of labor-friendly moves in other countries. In the U.S., California and New York decided to adopt a record-shattering $15 per hour by 2022 in a country where the federal minimum wage level has been stuck at $7.25 an hour since 2009. The United Kingdom and Japan have also taken steps to raise the minimum wage to significant levels by 2020. Germany and Russia are also reviewing a higher minimum wage.

Parties are catering to voters by pledging a better pay, but they need careful consideration of the pros and cons. After all, the minimum wage is not a temporary election issue. It is a serious matter that will affect the livelihoods of many Koreans beyond the election. Therefore, parties need to approach this issue seriously with the sole aim of improving the livelihoods of numerous Koreans barely getting by on meager incomes and not as an easy way to gain votes.

Korea's minimum wage level is not high compared to other OCED countries. The general public sentiment is tilting toward a raise at a time of rising poverty and social inequality. Many Koreans complain about stagnant wage levels that are not keeping up with the soaring hike in taxes and living expenses. Workers are finding it increasingly harder to afford basic costs, like housing and credit card payments.

The Minimum Wage Council, consisting of representatives from labor, management and the government, started negotiations this week to set the minimum wage for 2017. But the negotiations will be extremely difficult because the labor groups are calling for a significant increase. In 2015, the council set the minimum wage for this year at 6,030 won (about $5.30) per hour, up 8.1 percent from that of 2015. But even with the highest increase since 2008, there are many workers making less than what is needed to stay above poverty line. Proponents of a higher minimum wage say that it will also contribute to economic growth by boosting private consumption.

The impact of a higher minimum wage must be considered from the perspective of businesses as well. There are concerns that an increase will devastate businesses and result in job cuts.

The council should fully review the benefits and trade-offs of a higher minimum wage and produce a win-win result for both workers and employers.

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