Deputy Prime Minister and Minister of Strategy and Finance Choo Kyung-ho is speaking at the ‘policy meeting with the Gyeonggi-do’ held on June 28 at the Gyeongbokgung Palace in Mapo-gu, Seoul. Provided by the Ministry of Strategy and Finance
Deputy Prime Minister and Minister of Strategy and Finance Choo Kyung-ho met with the Korea Employers Federation on the 28th and asked, “Please refrain from excessive wage increases that can widen the wage gap between large and small businesses.” In a meeting with the heads of six domestic economic groups on the 2nd, he said, “Competitive price and wage increases by companies can create a vicious cycle of inflation.”
Deputy Prime Minister Choo had breakfast with Sohn Kyung-sik, chairman of the Gyeonggi Federation in Mapo-gu, Seoul on the same day and said, “Recently, some information technology (IT) companies and large companies have shown a high wage increase trend, which is very worrying, showing signs of spreading to other industries and companies. situation,” he pointed out. He said, “In particular, so-called ‘good’, large, high-ranking companies are leading competitively high wage increases in the name of performance compensation or talent acquisition.”
The reason why Deputy Prime Minister Chu requested a wage increase itself was because it was judged that competition for wage increases by companies could instigate inflation and widen the wage gap between large companies and SMEs, thereby amplifying social conflicts. According to the Ministry of Strategy and Finance, the wage ratio of SMEs to large enterprises has fallen from 58.6% in 2019 to 50.6% as of the first quarter of this year.
He continued, “Excessive wage increases that exceed the productivity of large companies will widen the polarization of the labor market and deepen job mismatches in various business sites. “He said. It is pointed out that the current excessive competition for wage increases could become ‘poisonous’ in the future in a situation where there are concerns about an economic downturn due to external adverse events such as global inflation, interest rate hikes, and the Ukraine war.
Deputy Prime Minister Choo said, “Wages are basically a matter for labor and management to decide autonomously. However, given the recent difficulties in the Korean economy, I hope that the management industry will refrain from excessive wage increases and raise wages to an appropriate level within the scope of productivity improvement.” . He emphasized, “I would appreciate it if you could make an effort to absorb the factors that increase costs as much as possible by increasing productivity through investment expansion.”
Regarding regulatory reform, Deputy Prime Minister Choo emphasized, “We will mobilize all the government’s capabilities to improve regulations, except for health and safety, in line with global standards so that Korean companies can compete confidently with companies around the world.” He said, “The government plans to implement a dynamic economy centered on the private sector by boldly reforming regulations like the sandbags that hold companies back,” he said. We will move forward,” he said.
Reporter Hwang Jung-hwan jung@hankyung.com
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