87% of Small Business Owners Say "Current Minimum Wage Is a Heavy Burden"... 38% Plan to Cut Jobs

Korea Federation of Micro Enterprises Releases Survey on the Impact of Minimum Wage Increases on Small Business Owners

Eight out of ten small business owners are struggling with the current minimum wage of 10,320 won, leading them to reduce hiring and extend the working hours of business owners themselves in order to cope.

The Korea Federation of Micro Enterprises released a report on June 21 presenting the results of a survey on the impact of minimum wage increases on small business owners. The survey was conducted throughout May, targeting 700 small business owners across the country.

According to the survey results, 87% of small business owners stated that the current minimum wage level is a significant burden. By sector, coffee shops, manufacturing, and beauty salons were found to feel the greatest payment pressure, in that order.

Small business owners have been responding to minimum wage increases by reducing labor input. From 2024 to 2026, the number of full-time employees decreased by an average of 5.90% per year. The trend of full-time employee reductions was particularly clear in sectors with high cost pressures, such as beauty salons (-20.63%) and coffee shops (-12.64%). Meanwhile, the average weekly working hours for business owners increased by 0.33% per year.

When asked about their responses to rising labor costs (multiple answers allowed), the largest share of small business owners (38.4%) cited "reducing employment and freezing new hires." This was followed by "considering the introduction of unmanned or automated systems" (32.9%). In particular, efforts to introduce technology replacements—such as kiosks or unmanned payment systems—were being actively considered in convenience stores and supermarkets (42.9%), as well as coffee shops and other retail businesses (40.0%). This shows that increases in the minimum wage are directly leading to job reductions.

In addition, 92.7% of small business owners with employees stated that "minimum wage increases" had a direct negative impact on their actual operating profit. Among small business owners whose operating profit had decreased due to the minimum wage increase, the most common answer for the appropriate minimum wage level to maintain current employment was "between 8,500 won and less than 9,000 won" (54.7%). Regarding the minimum wage level at which they could consider hiring additional staff, 57.7% responded "8,500 won or less."

Song Chiyeong, President of the Korea Federation of Micro Enterprises, said, "Currently, small business owners are facing a double hardship: declining consumption due to the economic downturn and labor costs exceeding 10,000 won." He added, "Policy support is urgently needed for the survival of small business owners and the recovery of employment, including differentiated minimum wage standards by industry and the establishment of a new job stability fund."

This content was produced with the assistance of AI translation services.