SEOUL (Reuters) - President Moon Jae-in wants South Koreans to work less and earn more – and to achieve that his government has hiked the minimum wage and slashed the maximum length of the working week. But Heo Jeong, who serves barley tea samples at a Lotte Mart store in Seoul, says she lost a third of her income as a result.
Heo’s store shortened its opening times and cut staff hours. The 48-year-old now makes 1.2 million won ($1,077) a month working 32 hours instead of 40, a third less than before because she now isn’t getting much night work at premium rates or as many chances to earn bonuses.
She is not alone. Many businesses are closing early rather than hiring additional staff after the legal cap on working hours was cut to 52 per week from 68, effective July 1.
It is one of a number of signs that Moon’s reforms are starting to backfire and his pledge to be the “Jobs President” who tackles inequality head on may be at risk, economists warn.
Another problem is that a January hike in the minimum hourly wage - the biggest in 17 years at a whopping 16 percent – may have had the opposite effect on incomes for the lower paid, and also become a deterrent to investment and recruitment.
Household income for the lowest 20 percent fell 8 percent in the first quarter from a year earlier, marking the sharpest fall since 2003 when Statistics Korea began compiling data, and almost a quarter of those aged 15-29 remain unemployed.
“I want to work more hours, and take night shifts as much as
