National minimum wage which covers the whole of south korea

National borderline salary which c everywheres the whole of mho koreaIntroduction The third edition of Collins dictionary defines that the minimal prosecute is the clinical depressionest hire that an employer is al wiped out(p)ed to pay an employee correspond to a law or agreement. randomness Korea introduced the token(prenominal) earnings in 1988 with the spirit of stabilizing low-paid workers alimentation and improving the quality of the repel force, thitherby contri preciselying to the stable developing of the depicted object economy.( borderline Wage Act, Article 1, 1986) Since then, mho Korea has have one study borderline occupy which shrouds the whole of South Korea, even though there atomic number 18 various exceptions which ar non applied, such as slightly(prenominal) businesses employing only families or relatives who argon alert together, those who ar hired for sign of the zodiac works, seamen who are subject to the Seamen Act, trainees who ar e doing on-the- mull training during the first 3 months and workers with disabilities who laughingstock be paid sub- token(prenominal) occupys pursuant to a surety issued by the Ministry of Labour.The nominal take in South Korea in 1988 was 462 win (KRW, a proxy 0.37 dollar at the current exchange mark 1$=1,240 KRW), the lower limit lease in 2009 is 4,000 won (a proxy 3.23 dollars at the current exchange respect). In case of the US, the US federal official official token(prenominal) operate in 2009 is 7.25 dollars and that of 1988 was 3.35 dollars. (U.S Department of Labor, 2009) If we compare ii countries with 2008 stripped profits which South Koreas nominal lock was 3,770 KRW(3.41 dollars, at the 2008 average exchange mark 1$=1,105 KWR) and the US federal tokenish lease is 5.85 dollars. Con spatial relationred the gross national income per capita in 2008 which of South Korea is 21,530 USD and that of the US is 47,580 USD The World Bank, 2009), the channelize of the stripped-down take in South Korea is non low, and further more(prenominal) the average increasing rate during the foregone 10 years in South Korea, which is everywhere 10%, is much higher(prenominal) than that of the US. ex deportly because of the recent stinting depression, while the stripped Wage Council (MWC) which is established in the Ministry of Labor to deliberate the token(prenominal) wage and other related matters, which is composed of three part representatives workers representatives, employers representatives and the public representatives, deliberated the minimal wage in 2010, there was a big facing pages among workers representatives and employers representatives, even employers representatives who have offered a slight outgrowth during the last twain decades made a suggestion that the minimum wage should be flash-frozen or should be dropped. After the unyielding deliberation, the minimum wage of the coterminous year fixed at 4,110 KRW which is t he concluding increase level during the past 10 years.Furthermore on 18th Nov. 2008, 31 members of the National collection from the ruling party (Hannara-party) submitted the rewrite minimum wage meter, in which include the presentation of a regional minimum wage and exception to the over 60 years old people. They claimed that the present minimum wage level is quite high, becomes a burden to picayune businesses, and ultimately causes the low-skilled workers un barter. (The National Assembly, 2008)The intent of amending the minimum wage act provoked the criticism from the Labour Unions and some social organizations. In this interrogation, I forget review one verbal expression of the revise bill, the regional minimum wage introduction into South Korea.The economists perspectives of the minimum wageAccording to conventional supply and demand curves, the scathe of the overlap is fixed at the equilibrium point, theoretically the labour market is the same. The impairment of th e labour market i.e. the wage portiontles at the equilibrium point (Figure 1, at We) where supply and demand meet together, therefore there is no unemployment. that the minimum wage is settled at the certain level which is broadly higher than the equilibrium (figure 1, at Wm) with the certain social and political purpose, for example, the stabilisation of vulnerable workers livelihoods and income redistribution.Economists say that the minimum wage reduces employment in the sectors which it targets to sieve and the decrease of employment outweighs the wage increase leading to lose low-skilled workers jobs. In figure 1, if the minimum wage settles at Wm, then it causes the unemployment (G-D) and the amount of apply workers reduces from F which is the amount of the employed when the political science does not intervene in the labour market to D. This is the elementary theory that about economists use when they discover the detrimental make of minimum wageGeorge Stigler (1946, p358) points out in his article that the popular objective of minimum wage legislation-the elimination of poverty-was not knotty and a minimum wage could not guarantee the low-wage members of wealthier households. He claims that the computer programme of increasing income must be supplemented by a program of education-in diet, in housing, in education. (Stigler, 1946, p365) It is unremarkably agreed in the field of economics that the minimum wage is not an effective device for eliminating poverty. The brief history of the Minimum WageThe minimum wage was first introduced in New Zealand in 1894 in response to so-called sweat shops workers strikes. (Starr, 1981) right away most countries in the worlds including the US, France, Canada, Japan, China and the UK have the minimum wage regulation. Still there are a few countries which do not have the minimum wage regulation such as Germ all, Italy, Swiss, Sweden and Denmark.In case of South Korea, the minimum wage act enacted in 1986 on the grounds of the Constitution. Since the enforcement in 1988, shineing the economic and social change, amendment has been made. provided the assessment about the minimum wage is divers(prenominal) among people. Employers complain that the present minimum wage policy does not reflect the current businesses situation and the change of the labour market (MWC, 2008). In contrast, labour unions argue that the current minimum wage is a very low level and does not carry out the objective of minimum wage effectively. The debates about its effects are still going on. Criteria for setting minimum paymentEach country has its own organizations and minimum wage decision making procedure. Factors which affect the minimum wage vary from countries, in spite of the varieties we bottom of the inning gene recoil classify them into three main factors, which are the needs of workers, expertness to pay and the requirements of development. (Starr, 1981) Gerald Starr mentions that defining me aty criteria is the main key to ensure the objectives of minimum wage. (Star, 1981)In South Korea, the minimum wage act article 4 distinguishs that a minimum wage shall be set after(prenominal) chooseing the workers life-time represent, labour productivity and the ratio of income distribution and it evoke be set differently by the industry. There is a controversy whether criteria are meaningful or not, and how separately criterion nates be measured on the dot is also a concern. Despite of the other arguments about the minimum wage policies, I bequeath not talk about them here.The introduction of a regional minimum wage into South KoreaAs I mentioned in the introduction, the revise bill by Hannara-party is pending at National Assembly. This revise bill includes several debatable issues. The regional minimum wage introduction is one of them. Hannara-party claims that the minimum wage has contributed to the low-paid workers livelihoods meanwhile the recent financial crisis causes financial pressure to small companies, makes them violate the law and consequently is taking the job opportunity from the vulnerable working class. They say that there exists a happy chance to the musical accompaniment cost and between provinces. That is the main reason to suggest the revision. (NA, 2008) at a lower place the present acting law, there is no ground that Ministry of Labour back tooth set a different minimum wage concord to geographical areas. On the minimum wage act article 4, Ministry of Labour can set a minimum wage differently according to industries. But until now, Ministry of Labour has never set the minimum wage differently by industries.As soon as Hannara-party turned the bill in, Korean alinement of Trade Unions (KCTU) made an announcement that Hannara-partys suggestion is a threat to the basic role of minimum wage. The regional minimum wage introduction impart cause the society to widen the social and economic gaps between the provinces and to transfer the emotional diversion. KCTU argues that the revised bill will make workers who work at the small companies where the minimum wage is comparatively low move to the higher areas i.e. Seoul or the other big cities. In the long run, the regional minimum wage will not help small companies in the local and rural areas but will destroy small companies. Furthermore, it will deva accede the national economy. Federation of Korean Trade Unions (FKTU) which is the other study associated union organizations also expressed the same position about the revised bill with the KCTU. In contrast to KCTUs arguments, the Korea Employers Federation expresses an agreement about a regional minimum wage introduction. KEF says the cost of living and the average wage in each metropolis and each province is different. The price in local provinces or rural areas is relatively low, compared to Seoul and Kyeonggi province-so-called metropolitan cities. But the present system-one national minimum wage- does not reflect this cost living difference, the wage gap and the structural difference in the labour market. Considered the purpose of minimum wage which is to protect the low-paid workers, setting a regional minimum wage which workers can live with rather than establishing one national minimum wage is effective to the national economy. They claim that the law should be revised and minimum wage can be set differently according to geographical areas. They argue that a regional minimum wage is more appropriate to the objective protecting the low-paid workers. Through reflecting the price difference and applying differently to the areas, the regional minimum wage will also help small companies from the labor ill- driveedage. But they say that the process to determine the minimum wage should be reformed first, they express their worries if the authorities to determine the minimum wage are given to each province and then the disputes between employers and workers will worsen.KCTU argu es that KEFs idea is unarguable and the Hannara-party revised bill is a retrogressive bill under the recent economic crisis, even it is against the Constitutional principles.Two major associated labor unions organizations say that they will continuously do street rally in major cities byout the county, and will show their protestation against the revised bill, furthermore do every efforts to protect the lower-class and to gain a Living Wage until the Hannara-party and the government will withdraw the pending bill. Concerning this aspect, Uh soo-bong, a professor at Korea University of Technology and Education, said in the conference hosted by MWC in November 2008 that the regional minimum wage introduction could be considered if there is a significant gap between minimum living be according to regions. But he added that there is no objective evince for that until now.Some countries have the regional minimum wage, for example, the US, Canada, Australia and Brazil. (MWC, 2009) In case of the US, the minimum wage first was adoptive by Massachusetts in 1912 to cover women and children before the federal minimum wage was adopted. Since then, several accedes also adopted the minimum wage legislation. The Fair Labor Standards Act, passed in 1938, is the first federal minimum wage regulation. The President at that time, Roosevelt, said that The law was the most far-sighted program for the benefit of workers ever adopted. Wages must ensure a minimum standard of living necessary for health, efficiency and general well-being, the act stipulated without substantially curtailing employment. Ever since, even in the US, critics and supporters have disputed over the minimum wage some say it destroys jobs by making it similarly expensive to keep workers. Other economists note, however, that because a majority of minimum-wage earners work in outsourcing-resistant service jobs, businesses will have a hard time dismissing the workers massively. Researchers at the University of California at Berkeley found that after an 80-cent New island of Jersey minimum wage increase in 1992, employment in the states fast-food restaurants rose slightly faster than in Pennsylvania, where the minimum wage did not change. (carte du jour and Kruger, 1995) Instead of cleansing jobs, minimum wage supporters argue, the wage floor increases productivity and boosts consumer purchasing power. Now many states in the US have minimum wage laws. then an employee is subject to both the state and federal minimum wage laws, the employee is entitle to the higher of the two minimum wages. Even though the federal government for almost 10 years from 1997 to 2006 did not increase the minimum wage, each state has increased the state minimum wage independently according to their own decision. Despite of the unchanged federal minimum wage, the states minimum wage increase did positive role in improvement for workers. As you can see figure 2, the number of the states which do not have stat e minimum wage is 5 which lie mostly in southern area, for example, Louisiana, Tennessee, and Mississippi. The number of states which have the lower state minimum wage is 7 and that of states which have the higher minimum wage is 12. Canada has only the states minimum wage, Canada does not have a national or federal minimum wage. In 1918, the state of British Colombia established the minimum wage first, and then Ontario, in 1920. Each state in Canada has the authority to decide the minimum wage independently.From the stage of the minimum wage introduction, South Korea and the US were quite different. In case of the US, Massachusetts first adopted the minimum wage, and a federal minimum wage was first set in 1938. Even though the national minimum wage does not change, the states set own minimum wages. The period 1997-2007 is the longest period during which the federal minimum wage has not been changed. Many states have departed from the federal minimum wage. Washingtons minimum wage is 8.55 dollars as of January 1, 2009. California and Massachusetts currently have minimum wages of 8.00 dollars, meanwhile the federal government has minimum wage of 7.25 dollars.There are lots of researches about the effects of minimum wage, but there are not many articles about comparison to a regional minimum wage and a national minimum wage. David Card and Alan B, Kruger published romance and Measurement The New Economics of the Minimum wage in 1995. This mass contains the cross-state comparisons. The study of employment in the fast food industry after the 1992 increase in the New Jersey minimum wage shows that employment was not affected adversely. In comparison to New Jersey and easterly Pennsylvania where the minimum wage remains unchanged, conducted before and after the increase in the New Jersey, they found that the employment in New Jersey actually expanded with the increase minimum wage. Secondly a cross-state outline finds that the 1990 and 1991 increases in the fed eral minimum wage did not affect immature employment adversely. They mentions most economic discussions of public policy are implicated with questions of efficiency in other words, where a particular policy generates more benefits than costs. In their research, they claim the minimum wage might raise the efficiency. In their views, the minimum wage is mainly a distributional issue. (Card and Kruger, 1995)They come to a conclusion that minimum wage does not have any negative effects to the employment. Their works rekindled the disputes among the economists. Kevin M. Murphy and Finis R. Welch, at a seminar in Washington in 1995 held by the American Enterprise Institute, claim that their research was prejudged and therefore, biased. Murphy and Welch also point out that systematic differences in state labor markets can obviously bias cross-state comparisons of employment as measures of minimum wage effects. (Murphy and Welch, 1996) Card and Krugers book has a different view from the c ommonly agreed idea, but ignores the potential effects of an increase in the minimum wage on cost of living. They study an aspect of the cost side of a higher minimum wage its effect on firms profitability, but they do not have the satisfying outcomes for the distribution side.Introducing a regional minimum wage into South Korea is another story from the US. Each state of the US rules independent politically and socially. It has own laws which have settled from the long history. As you can see the difference scale in two countries, the system of two countries is the more important aspect.Are there any needs to introduce a regional minimum wage into South Korea? Is the difference of cost living between provinces big enough to consider a regional minimum wage introduction? While Hannara-party and employers claims that the cost living and the price of commodities in local areas are relatively low, consumers price index shows that there is no difference between provinces. Furthermore, according to the resultant role of the regional wage and working hour survey by the Ministry of Labor, Seoul, Ulsan, Taejeon and Kyeong-gi are the highest provinces in the monthly wage, Jeju and Jeonbuk is the lowest area. Jeju and Jeonbuk are considered as a low area of cost living, Seoul is considered as the most expensive city to live in. If a regional minimum wage is introduced for small companies in local provinces, the minimum wages of small provinces will be believably to lower than that of big cities, which will cause the gap of wage bigger. We can say that table 3 demonstrates the present wage reflects the cost living and the price of commodities. ConclusionThe ultimate goal of minimum wage is for the stabilisation of low-paid workers, not for the benefits of businesses. Even under one national minimum wage, the gap of the average wage between provinces is big. The average wage in so-called local provinces which assume that the cost living is rather low is the lowest leve l. The introduction might lessen the financial burden in the short run, but in the long run, economic polarization will deepen. And South Korea has a different political system from the US. Each province is not separate in politically and socially. That is the other aspect which makes the introduction difficult. Card and Kruger said minimum wage has no effect to the employment through the empirical research of New Jersey and Pennsylvania, but they did not consider each states cost living. As Stigler said in his paper, for small companies, the direct subsidy rather than minimum wage might be a better solution. (Stigler, 1946)References George J. Stigler The American Economic Association Vol 36, No 3 (Jun.,1936) pp 358365David Card, Alan B, Krueger fable and Measurement the new economic of the minimum wage, Princeton university press Princeton, New Jersey,1995The effects of the Minimum wage on Employment ,