A couple operating a convenience store in the apartment complex in Dongtan, Gyeonggi Province, decided to increase their working hours after one part-time worker quit, rather than hiring a new employee. They adjusted their operating policy to have the remaining time slots covered by existing part-time workers and to close during late-night hours.
A said, "The burden of labor costs is large, and there are not many customers during the early morning hours, so we made this decision," adding, "We are closely monitoring how much the minimum wage will rise."
As the labor sector claims that the minimum wage should be raised to 11,500 won, a 14.7% increase from this year, concerns are growing among self-employed individuals. With rising labor costs in recent years, there is worry that if this increase materializes, management difficulties may intensify.
According to a survey by The Federation of Korean Industries on the 13th, the biggest management cost burden for the self-employed is raw material costs (22.2%), followed by labor costs (21.2%). The average monthly burden of labor costs last year was 2.95 million won, which has increased at a higher rate than the rise in sales or operating profits.
The minimum wage proposed by the labor sector for next year, 11,500 won, translates to 2.4035 million won per month (based on 209 hours). The Minimum Wage Campaign Headquarters argued that "an increase in the minimum wage should boost consumption spending by low-wage workers, leading to increased sales, allowing small and medium enterprises to also benefit."
However, statistics show a different trend. According to employment trends from the Statistics Korea and the Korean Statistical Information Service, the number of self-employed individuals in the first quarter of this year is at 5.523 million, a decrease of 14,000 compared to the same period last year. In the first quarter of last year, it also fell by 9,000, and in the second and third quarters, it dropped by 101,000 and 26,000, respectively. Although it increased by 10,000 in the fourth quarter of last year, it has again turned to a downward trend.
The number of 'self-employed individuals with employees' also decreased by 25,000 in the last first quarter. In contrast, the number of 'self-employed individuals without employees' increased by 11,000. This reflects the rising trend of small business owners who cannot bear the burden of labor costs and are either reducing their hiring of staff or running their businesses alone.
Unlike in the past, this time, discussions regarding not only the increase of the minimum wage but also the expansion of its applicability are increasing the burden on self-employed individuals.
The labor sector is demanding both the strengthening of the legal status of special employment workers and an increase in wages, citing the 'expansion of minimum wage application' mentioned by President Lee Jae-myung during his candidacy.
While the labor sector argues for improvements in rights through the increase and expansion of minimum wage, there are also voices expressing concern about side effects such as increased expenses.
Choi Cheol, a professor of consumer economics at Sookmyung Women's University, explained, "In the past, significant increases in the minimum wage led to job losses in part-time or daily positions," adding, "As prices rise significantly and both consumers and corporations are struggling, it is necessary to reach an agreement at a reasonable level regarding minimum wage increases and expansions."
A representative from the Small Business Association stated, "Statistics such as the arrears and bankruptcy rates among the self-employed are at historic lows," and added, "If the burden of labor costs increases in the context of domestic demand sluggishness, consumption contraction, and high inflation, it will negatively impact economic growth."