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(Yonhap Feature) Job loss follows minimum wage increase

All News 09:00 January 12, 2018

By Choi Kyong-ae

SEOUL, Jan. 12 (Yonhap) -- Lee Hyun-min, a 38-year-old chain restaurant owner in Seoul, installed a self-service kiosk and let two part-time workers go last month, in a preemptive measure to cope with a minimum wage increase.

South Korea's minimum wage rose by 16 percent to 7,530 won (US$7) starting from Jan. 1, the biggest jump in about two decades. The hike has sparked backlash from small and medium-sized firms and mom-and-pop stores that can ill afford the extra outlay.

"We had no option but to replace a cashier with the self-service kiosk due to rising labor costs. Elderly customers still feel uncomfortable with the system but it is easy to use for a majority of young customers," Lee told Yonhap News Agency in a recent interview at his Yookdaejang chain store in Gwanghwamun, central Seoul.

Yookdaejang sells traditional Korea spicy beef soup with vegetables called "yukgaejang."

In these photos taken Jan. 5, 2017, Lee Hyun-min (R) stands before a self-service kiosk set up last month to cope with a minimum wage increase at his Yookdaejang chain store in Gwanghwamun, central Seoul. (Yonhap)
These photos taken Jan. 5, 2017, show an unmanned Emart24 convenience store in central Seoul and a customer paying for an item at the store. (Yonhap)

Yoon Cheul-hee, 53, opened VIETKONG, a Vietnamese rice noodle chain restaurant in Shinchon, western Seoul, in May last year with the "self-serving" concept from the outset.

"I am one of three workers in this restaurant kitchen. We have no employee in the dining area. We make food when customers order through a self-service kiosk. Customers pick up their own food," Yoon told Yonhap News.

As most of customers are in their 20s and 30s in this college district and familiar with smartphones, they are rapidly adapting to the unmanned nature of the eatery, he said.

Eve Teh, a 31-year-old Malaysian customer at VIETKONG on Friday, said foreigners like her prefer such kiosks due mainly to language barriers.

"As the kiosk shows the pictures of foods and their prices, it is really helpful in selecting what to order," she said.

Lee and Yoon represent a growing number of business operators who are introducing self-service kiosks, which are accelerating automation and leading to job losses.

Small businesses are not alone. Big companies that run fast food and convenience store chains have gradually increased the number of touch screen ordering devices or began to open unstaffed convenience stores in Seoul and the metropolitan areas.

Burger King, for instance, has introduced the kiosks in one-third of their outlets in South Korea. It had 271 outlets at the end of 2016. Shinsegae Group, a retail conglomerate, currently operates five unmanned Emart24 convenience stores and will increase that number depending on customer response, according to the company.

Shin Ye-ryeong, a 27-year-old trainee at Starbucks Korea, said on Friday she had mixed feelings about unmanned convenience stores when she dropped by the Emart24 outlet in the Chosun Hotel building.

"I have no difficulty in shopping at this kind of unmanned store. But at the same time this could mean fewer jobs," she said.

In these photos taken Jan. 5, 2017, Yoon Cheul-hee (R) talks to Yonhap News about the higher minimum wage's possible impact on mom-and-pop stores at his Vietnamese noodles restaurant in Shinchon, western Seoul. (Yonhap)

A recent survey conducted by the Korean Employers Federation (KEF) found that 19.5 percent of 186 businesses with fewer than 300 workers are considering expanding automation or adopting unmanned payment systems.

And 21.4 percent of the companies are mulling raising product or service prices. 42.7 percent of them plan to cut jobs due to rising labor costs, the KEF survey found.

Raising minimum wage is a desirable policy that should be pursued by the government, but the problem is the level of minimum wage and the quickness with which the wage was raised, employment experts said.

"The government needs to focus on establishing a stronger social safety net that includes unemployment benefits. If not, small businesses will have to shed jobs or move their production facilities out of the country," Kim Dae-ho, chief of the SocialDesign Institute, told Yonhap News.

The Moon Jae-in government aims to increase the minimum wage to 10,000 won during its five-year term, which ends in May 2022. This pledge has been widely hailed by low-skilled workers.

Automation will ultimately take over low-skilled jobs. The increased minimum wage appears to be helping low-skilled workers for now, but may end up hurting many more vulnerable workers down the road, Kim said.


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