The announcement over the weekend that South Korea will be increasing its minimum wage by 16% next year represents a victory for President Moon Jae-in, who was elected on a pledge to boost incomes and reduce inequality. Korea’s minimum wage is set every year by the Minimum Wage Commission, which includes representatives from the trade unions, businesses and the general public. The 16% increase, which is the biggest rise since 2001, takes the hourly minimum wage to 7,350 won (US$6.50). Approximately 12% of the workforce were receiving the minimum wage in 2015, and it is hoped the big rise will provide a boost to consumption. Although the decision has been criticised by business groups, who claim it could cause unemployment to rise and put upward pressure on inflation, the fact that the government will give aid to small business owners should help to mitigate some of the negative effects.
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