Minimum Wage Chaos

Posted by AsiaViews | Jan 15, 2018 | 0 |

Korea Herald

9 Jan 2018
Government must take side effects seriously, review plan to raise it sharply

The sharply increased minimum wage is generating more negative side effects than anticipated.

The government has vowed to work out complementary measures while cracking down on violations of the minimum wage law, but their effectiveness is questionable.

A review of its policy to keep raising the minimum wage until 2020 is needed.

With the minimum wage for this year raised 16.4 percent to 7,530 won ($7.06) per hour, part-time and contract jobs have been hit hardest, while prices of products closely related to the livelihoods of ordinary people are rising.

A job website’s survey of 1,458 adults looking for part-time employment found that 72 percent of them expected more difficulties in finding jobs or are worried about being fired in the wake of the rise in the hourly minimum wage.

Some universities installed unmanned security systems after security guards retired, and replaced full-time janitors with part-time cleaners. Convenience stores began to fire part-time workers or reduce their working hours. A Seoul apartment complex decided to dismiss all its security guards and outsource security jobs. Fast-food restaurants are replacing cashiers with self-service kiosks.

This is far from what the government intended. It had looked forward to seeing a virtuous cycle in which raising the minimum wage would increase household income, followed by an increase in consumption and then in production and employment.

But in reality, the minimum wage hike has affected disadvantaged groups in the labor market the most. The remaining workers will get higher wages, but far more are not getting a job they might have had at the previous wage.

According to a civic group’s investigation into law-bending practices related to the minimum wage, some small businesses have divided bonuses into 12 equal parts and are adding each part to monthly salaries, as bonuses are not included when calculating the minimum wages due.

Others have split their businesses into smaller ones to apply for wage subsidies that the government gives to businesses with fewer than 30 employees.

The Ministry of Labor and Employment will inspect about 5,000 sites in five lines of business across the country — supermarkets, convenience stores, gas stations, restaurants, and apartment and building management offices — to crack down on employers who fail to pay the minimum wage properly.

Deputy Prime Minister and Minister of Strategy and Finance Kim Dong-yeon recently visited restaurants in Seoul and appealed to them to refrain from laying off employees. But restaurant owners reportedly complained they could not hold out without reducing the number of employees or raising prices.

A government task force on minimum wage is working on measures to reduce the cost burden on small businesses, but not many policy tools remain. Measures to lower rents or credit card commissions are said to be considered, but they will likely cause other problems.

President Moon Jae-in said Monday, “Though the minimum wage increase may have caused confusion at first, it will be of great help to the sustainable growth of our economy.”

This means he will keep his pledge to raise the minimum wage to 10,000 won by 2020 despite side effects. He does not seem to regard the situation as serious.

The government publicizes the minimum wage subsidy fund, but as Kim said, it is not a fundamental solution. Even the fund is not likely to be viable for many, because small businesses are required to pay employment insurance premiums for employees in order to receive minimum wage subsidies. However, most small businesses cannot afford to insure their employees.

There had been warnings before the new minimum wage took effect. About 40 percent of small businesses said they would reduce their employment of staff and part-time workers.

Uh Soo-bong, chairperson of the Minimum Wage Commission, said recently that the government needs to give up on raising the hourly minimum wage to 10,000 won. A policy must be reviewed if it causes more side effects than expected.

(Accessible at: http://www.koreaherald.com/view.php?ud=20180109000471)

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EXTRICATING NDONESIAN CHILDREN FROM ISIS INFLUENCE ABROAD

Indonesia urgently needs to revisit the possibility of repatriating the neediest of its young citizens stranded abroad, whose families had earlier joined ISIS. Most of these children are in camps in northern Syria but there are also small numbers in the Philippines, Afghanistan and Iraq. “Extricating Indonesian Children from ISIS Influence Abroad”, the latest report from the Institute for Policy Analysis of Conflict (IPAC) argues that the government could begin by bringing back small groups of unaccompanied children under ten years of age, who pose minimal security risk and are most vulnerable to deteriorating conditions in the camps.“The problem is that health and security conditions are worsening by the day in the Syrian camps, and the children are growing older,” says Dyah Kartika, IPAC analyst. “They need access to schools, a nurturing environment, and medical attention. If the government waits too long, the children will be further exposed to ISIS ideology.” The new report examines a 2019 list of Indonesians in camps and prisons run by the Kurdish Syrian Democratic Forces (SDF). The Indonesian government has been trying to verify their citizenship, but with pseudonyms, misspellings and bad transliterations, it is a daunting task. At the time the data was collected, between March and June 2019, there were 555 Indonesians in SDF camps and prisons, including 367 children. Among the children, approximately 277 were under the age of ten and 34 were unaccompanied. In June 2021, there are fewer than ten children who are both unaccompanied and under the age of ten that could be prioritized for return. Bringing back children of ISIS families is no easy task. The report analyses the main challenges faced by the Indonesian government. These include definitional issues, bureaucratic competition, the difficulty of verifying nationality, evaluating the toll of exposure to conflict, assessing security risk, and finding relatives or others willing to provide care once the children are returned. In addition, COVID has meant stringent restrictions on travel, placing further obstacles in the way of repatriation. There are several models for rehabilitation of children exposed to violent extremism in Indonesia that could be modified to accommodate the needs of children repatriated from abroad. The report examines these models and argues that the government does not need to have every detail of rehabilitation programs in place before it starts extricating children from ISIS influence. It can start by bringing back the most vulnerable children and then modify programs as needed.

“It’s important that the government see these children as victims” says Dyah. “They deserve a chance to be children again.”

Minimum Wage Chaos