President Moon’s government promised to increase the minimum wage to ＄9.33(USD) before 2020. The government officials say, if the minimum wage is raised, the low-income group’s disposable income will promote overall consumption. Consequently, it will also increase corporate profits and investments, which will boost the economy. Disposable income refers to the income a person can actually spend or save freely of a person’s income, excluding his or her taxes and non-consumption expenditures.
In effect, the minimum wage for 2018 is ＄7.02(USD), up ＄0.99(USD) from the lowest wage in 2017. As a part-time employee, I was so pleased at the news about a raise in the minimum wage. Last year, working three times a week for five hours a day, I earned $352.18 a month. This year, I do the same thing and receive $417.05. It was a big difference for me as a student. However, I think that raising the minimum wage has many adverse effects on the economy of our society.
For example, due to the increase in the minimum wage, there has been a controversy over the dismissal of all security guards from one apartment in Gangnam, Seoul. The layoff happened because of the sudden increase in apartment maintenance costs. As you can see from this incident, the number of jobs would gradually decline as a result of the minimum wage hike. According to the National Statistical Office, the number of sales and functional workers and associated functional workers fell 1,000 from the same month last year. In addition, in July last year, when the increase of minimum wage was confirmed, 6.2 million workers decreased, and, in December, the decrease amounted to 15.7 million.
Moreover, the number of people who don’t hire part-time workers is increasing in proportion to the increase in the minimum wage. Instead of hiring part-time workers, they make their clients serve themselves. In some movie theaters, unmanned ticketing or vending machines displaced staff selling tickets or snacks. Additionally, some restaurants request customers to serve themselves water and side dishes, or return dishes without the help of waiters or waitresses. Besides, employers have been caught violating employment rules as they contrive to ease the burden of rising labor costs, by hiring short-term part-timers and reducing the number of working days.
In some cases, the minimum wage is not paid to workers at all. The minimum wage council reported that the number of low-paid workers stood at around 2,664,000 as of 2016, accounting for 16.6 percent of the total 1.96 million salaried workers. The rate is expected to rise steadily by the end of 2018, when the minimum wage would skyrocket.
Moreover, we have another problem: Korea has an export-dependent economic structure that imports raw materials, processes them, and then exports due to the lack of the nation’s underground resources. Dollars are required in order to import raw materials or major components from abroad, and to make products that will boost the domestic economy. Actually, our country has earned dollars chiefly by exports. Considering such economic structure and environment, as the developed countries such as the United States and England are showing some signs of their return to protectionism, our nation’s condition for export is not favorable, compared to the past. In this tough situation, if the government exclusively pushes companies to improve the quality of employment by cutting back on working hours and contract workers, they will likely suffer from a weakened export competitiveness and, thereby, the ongoing deficits. This is expected to quickly aggravate the nation’s overall economic conditions.
To solve this problem, the government should make its full administrative efforts so that the three trillion won from the job security fund is distributed to the suitable places in a timely manner. Additionally, as stated earlier, it is necessary to enhance the supervision of the labor activities that are subject to changes in the employment rules disadvantages. It is regrettable that, paradoxically, a policy aimed at promoting the economy of our nation does not satisfy both corporations and part-time workers. Obviously, money must circulate in order to boost the economy. Accordingly, President Moon’s government should pay more attention to promoting the overall wholesome milieu of our nation’s economy so that we can sustain our economy in a facile, harmonious way rather than provide a bailout solely for low-income brackets.