Minimum Wage Report

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Is it possible that raising the minimum wage actually makes it harder for people to find work? The Korea Development Institute has released its first report analyzing the issue. The report urges the government to slow down its plan to hike the minimum wage to avoid any unintended consequences.

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Kim Ji-un, who runs a convenience store, had to fire two of his six part-time employees this year because of the soaring labor costs stemming from a raise in the minimum wage.

[Soundbite] Kim Ji-un(Owner of Convenience Store) : "I have reduced my staff, which means I have to work longer hours now. I can't fire more employees if the wages keep going up."

The Korea Development Institute says that the higher basic wage may result in the loss of up to 84,000 jobs this year. The institute said that the aftermath ofthe higher minimum wage is not palpable yet because of the government funding, and it's still premature to say that the aggravating situation in the job market stems from the wage hike. But things may change next year. The KDI says that in order to reach the 10,000-won target, the minimum wage must be raised 15 percent annually. But without additional subsidies, up to 96,000 jobs may be lost next year and 144,000 in 2020. This means that the government should either increase funding or slow down the pace of minimum wage increase. The think tank's first-ever analysis of the negative effects of the rising basic wage may affect the government's plan to raise the basic wage in the future.