According to the Small Business Association, a survey conducted in May among 700 small business owners nationwide revealed that 87% expressed that the current minimum wage is a major burden. The sectors most affected include coffee shops, manufacturing, and beauty salons.
Regarding the perception of rising prices, 59.9% of respondents indicated they feel the impact. This sentiment was particularly strong in the food and accommodation sectors, as well as convenience stores and supermarkets, where 65.1% reported feeling the effects. However, despite rising costs, most small business owners are hesitant to raise prices, with 76% stating that increasing prices is not feasible.
In response to the minimum wage increase, small business owners have been laying off employees and reducing labor input. From 2024 to 2026, the average number of full-time employees decreased by 5.9%, with significant reductions in sectors under pressure from costs, such as beauty salons (-20.63%) and coffee shops (-12.64%).
As employees leave, the burden shifts to the business owners. The average weekly working hours for employees decreased from 6.1 to 5.5 hours, a 3.39% reduction, while the average weekly hours for business owners increased slightly from 10.0 to 10.1 hours, indicating a trend of labor intensity polarization.
The economic outlook for small business owners is grim, with 67.0% reporting a decline in sales compared to the previous year. The primary reason cited was reduced consumer spending due to economic recession (58.2%), followed by changes in management conditions such as digital transformation (12.6%) and rising prices (8.1%). Additionally, 67.9% expressed concern about job stability.
In terms of strategies to cope with rising labor costs (multiple responses allowed), the most common response was reducing employment and halting new hiring (38.4%), followed by considering automation (32.9%). Notably, sectors like convenience stores and supermarkets (42.9%) and coffee shops and other retail (40.0%) are actively exploring technological replacements, indicating that minimum wage increases are directly linked to job losses.
External factors contributing to decreased operating profits include rising energy costs (86.9%), increased rent (86.6%), and higher raw material costs (85.2%). Among small business owners with employees, 92.7% reported that the increase in minimum wage has led to a significant decline in their actual operating profits.
On June 19, the Small Business Association issued a statement expressing strong regret over the Minimum Wage Commission's decision not to apply differentiated minimum wages by sector, stating, "This is a disregard for the circumstances of small businesses, which globally set minimum wages based on region, industry, and skill level. We request a reconsideration of this decision."
Song Chi-young, president of the Small Business Association, emphasized, "Currently, small business owners are facing the dual challenge of a recession that has dampened consumer spending while also bearing labor costs exceeding 10,000 won. It is crucial to implement policy measures such as differentiated minimum wages by sector and the establishment of job stability funds to ensure the survival and recovery of small businesses."
* This article has been translated by AI.
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