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South Korea to raise minimum wage by 2.9% in 2020; smallest hike in decade
[SEOUL] South Korea on Friday said it plans to raise the nation's minimum wage by the smallest amount in a decade, as large increases in the past two years backfired on the government with the slump in crucial low-paying jobs in the manufacturing and services sector. The Minimum Wage Commission agreed on an increase of 2.9 per cent to 8,590 won (S$9.91) an hour for next year, the smallest rise since a 2.8 per cent hike in 2010.
It raised the minimum wage by 10.9 per cent and 16.4 per cent this year and last year, respectively, to boost private consumption and help narrow income equality.
However, the combined 29 per cent hike in the nation's mandatory minimum wages over two years led to a drop in low-paying jobs across manufacturers, construction and retail sectors already struggling from cooling global demand.
South Korea's finance ministry cut its annual growth target to 2.4-2.5 per cent, a seven-year low, after the economy shrank a seasonally adjusted 0.4 per cent in the first quarter - the worst since the global financial crisis as global trade tensions and slowing domestic demand took a toll.
South Korea's labour-friendly President Moon Jae-in has pledged to raise the minimum wage by 55 per cent to 10,000 won per hour by 2020, but he apologised last year saying that it could be difficult to fulfil his pledges.