김대종 세종대 교수__TheKoreaTimes__Minimum wage policy faces major overhaul

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President-elect Yoon Suk-yeol answers questions from reporters on his way to the presidential transition committee's office in Seoul, Tuesday. Joint Press Corps-Yonhap

Yoon's move is a step in the right direction: expertsBy Lee Min-hyungThe incoming administration headed by President-elect Yoon Suk-yeol will seek to overhaul the country's highly controversial minimum wage policy in a bid to help small businesses reeling from the economic fallout of the prolonged COVID-19 pandemic.The dispute is centered on revamping President Moon Jae-in's pro-labor wage policies by applying differential wage systems for each industry at a critical juncture where a growing number of the self-employed and small business owners are crying foul over a rising labor cost burden.The country's hourly minimum wage came in at 6,470 won ($5.31) in 2017, the first year of Moon's presidency. But it soared by 16 percent the following year and has since been on a steep rise to 9,160 won in 2022, an increase of 41 percent compared to five years ago.Yoon has expressed his idea of revising the system in a more realistic manner by adopting a differential system based on regions and industries."There should be discussion over the introduction of a forward-looking minimum wage system by differentiating wage policies for each region and type of business," Yoon had said while running for the presidency.Starting Monday, the Minimum Wage Commission, a sub-organization under the Ministry of Employment and Labor, started an internal discussion on the minimum wage policy for next year. The commission will have to submit its decision to the labor minister by June 29. But due to the contentiousness of the issue, it typically takes more time for the commission to make a final decision on the annual agenda.Prime Minister nominee Han Duck-soo also expressed his negative viewpoint on Moon's minimum wage policy."When the minimum wage rises steeply, companies will reduce employment, which will result in a lose-lose game for both sides," Han told reporters recently."The minimum wage should be decided by negotiations between labor and management, and the government needs to minimize its intervention and remain very careful before taking action on the issue."The Moon administration has pushed for raising the minimum wage as part of its flagship income-led growth strategy.But the much-touted policy ended up a de facto failure, driving the self-employed and small business owners into a corner and aggravating a series of employment-related indices. According to data from Statistics Korea, the number of temporary workers here has increased gradually during Moon's presidency. In 2017, the figure was at 6.57 million, but it has since risen to 8.06 million as of August 2021.Given that the minimum wage hikes have added to the financial burden of the self-employed suffering amid the prolonged pandemic shock, the incoming administration is widely expected to scrap the botched economic drive adopted by the Moon administration.Experts said Yoon's policy stance is a step in the right direction, as the income-led growth strategy turned out to be far from reality over the past five years."The differential minimum wage policy is more reasonable, as each industry player has a different ability to bear labor costs," said Sung Tae-yoon, an economics professor at Yonsei University."The purpose of the income-led growth policy is understandable, but the gap between reality and ideals has taken a huge economic toll on the self-employed and small business owners," Sung added.Kim Dae-jong, a professor of business administration at Sejong University, advised the incoming administration to follow in the footsteps of major developed countries in its minimum wage policy."The global trend is to differentiate the minimum wage by region and age," he said. "Singapore does not even have a fixed minimum wage system. The minimum wage policy under the Moon administration has caused multiple side effects. Many social groups will benefit from a differentiated minimum wage policy."

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