S.Korea to raise minimum wage by 2.9% in 2020, smallest hike in decade

SEOUL, July 12 (Reuters) - South Korea on Friday said it plans to raise the nation's minimum wage by the smallest amount in a decade, as large increases in the past two years backfired on the government with the slump in crucial low-paying jobs in the manufacturing and services sector. The Minimum Wage Commission agreed on an increase of 2.9% to 8,590 won ($7.32) an hour for next year, the smallest rise since a 2.8% hike in 2010.

It raised the minimum wage by 10.9% and 16.4% this year and last year, respectively, to boost private consumption and help narrow income equality.

However, the combined 29% hike in the nation's mandatory minimum wages over two years led to a drop in low-paying jobs across manufacturers, construction and retail sectors already struggling from cooling global demand.

South Korea's finance ministry cut its annual growth target to 2.4-2.5%, a seven-year low, after the economy shrank a seasonally adjusted 0.4% in the first quarter - the worst since the global financial crisis as global trade tensions and slowing domestic demand took a toll.

South Korea's labour-friendly President Moon Jae-in has pledged to raise the minimum wage by 55% to 10,000 won per hour by 2020, but he apologised last year saying that it could be difficult to fulfil his pledges. ($1 = 1,173.2100 won) (Reporting by Joori Roh Editing by Shri Navaratnam)

2019-07-12 02:54:37

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