S. Korea earmarks $2.7 bln for temporary minimum wage subsidies

By Lim Chang-won Posted : November 9, 2017, 15:05 Updated : November 9, 2017, 15:05


South Korea earmarked some 2.7 billion US dollars in temporary state subsidies to help small firms reduce their financial burden stemming from a minimum wage hike that would become mandatory next year.

Government officials said 2.97 trillion won ($2.7 billion) was set aside to implement President Moon Jae-in's policy of raising the hourly minimum wage gradually to 10,000 won per hour by 2020. Next year's obligatory minimum wage was set at 7,530 won per hour and 1.57 million won a month.

A company with less than 30 workers would get up to 130,000 won per person if his monthly payment stands at less than 1.9 million won. Janitors and apartment security guards are eligible even if their workforce exceeds 30.

Finance Minister Kim Dong-yeon said the minimum wage fund would help ease South Korea's income polarization, which has restricted domestic consumption and economic growth. "For income-led growth, the improvement of earned income is of the utmost importance, and the starting point is the increase in minimum wages."

The fund expires in the first half of next year, but Kim said it could be extended. Companies complained that temporary subsidies are not enough to cope with rising labor costs.

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