In 2018, the minimum wage is set at 7,530 won. The minimum wage increased by 16.4% compared with the previous year. There are a lot of advantages in this wage system.
First of all, it raises the economic standard of the workers. In addition, an increase in the minimum wage was intended for the welfare policies, and thus it helped the low-paid worker mitigate the burden of living costs. Furthermore, the increase in wage led to an increase in consumption, thereby resulting in a virtuous cycle in which more workers could be hired for production.
However, the increase in minimum wage also has disadvantages. First, the enterprise may reduce employment to cut the additional cost. Employers want to reduce employment as labor demand decreases and production costs increase. This means that the increase in minimum wage could lead to the increase of unemployment rates.
In addition, most of the non-regular workers are not protected by contracts since they are not under contract with their employers. For them, an increase of the minimum wage means that they are more likely to lose their jobs. This situation indicates that employers want to reduce labor costs by reducing their employment. Moreover, an increase in the minimum wage could cause more discrimination for the relatively weak. The minimum wage system, which is thought to protect the relatively weak has produced an adverse effect in that companies are hiring more efficient people at the same price.
There are two sides in every system and the same is true for the minimum wage system. It is not only necessary for our society, but also for all of us to heed the fairness of the distribution of benefits from the increase of the minimum wage.