Moon Jae In Government which was established in May 2017 rapidly raised the minimum wage by 16.4% in 2018, by 10.9% in 2019 to achieve the minimum wage 10,000 won in 2020 as income-Driven Growth policy.
Because of rapid the minimum wage increase, a n...
Moon Jae In Government which was established in May 2017 rapidly raised the minimum wage by 16.4% in 2018, by 10.9% in 2019 to achieve the minimum wage 10,000 won in 2020 as income-Driven Growth policy.
Because of rapid the minimum wage increase, a number of people give their opinions the minimum wage disagreement of small business person, the demand for differentiated the minimum wage by sector, company scales, the skill level of foreign workers and so on. This article deals with the effect of the minimum wage increase on employment of foreign workers through empirical studies.
This study is meaningful in terms of expansion of research subjects and reliability of data. Previous studies were dealt with the minimum wage increase on employment of the native workers. But the research subjects of this article were expanded from the native to foreigners. In order to overcome the limitations of previous studies which were used a sample of different data integration occurred low reliability of data problems, as ascertaining the employment change of foreigners and the natives at the same workplace when raising the minimum wage, the data were obtained from 111 manufacturers through questionnaires, and panel data was constructed.
The purpose of this article is to study the effect of the minimum wage increase from 2015 to 2018 on employment of foreign workers by the survey of 111 manufacturers across the country with experience in employing foreign workers.
The summary and implications of the study are as follows.
First, even if the minimum wage is raised, it is proved that there is no effect on employment of manufacturing foreign workers. The study found that the minimum wage and the employment of foreign workers had a positive impact but were not statistically significant. It means even if the minimum wage was raised, there was no reduction in employment of foreign workers. These results are due to the fact that businesses responding to the questionnaire survived despite the minimum wage increase and could not obtain data on the decrease in the employment of business that had suffered business deterioration due to the minimum wage increase and closed down. However, sales and root industries have a statistically significant positive effect on the employment of foreign workers.
Second, we found that the minimum wage increase did not erode the employment of Korean workers by increasing the employment of foreign workers. As a result of the study, the minimum wage increase was not statistically significant although employment of the foreign workers increased and employment of the domestic workers decreased. In other words, if the employer raises the minimum wage and the employers has to dismiss the employee, there is no difference in whether to fire the foreigner or dismiss the Korean. Revenue and facility innovation were found to have a statistically significant positive effect on the employment of native Koreans.
Third, we demonstrated that the effect of the minimum wage of the employment of foreign workers is not moderated by the root industry. The root industry is a manufacturer that carries out business by utilizing technologies such as casting, molding, welding, surface treatment, heat treatment, etc. It is more difficult to hire native workers than other industries. According to the results of the study, as the minimum wage increases, the number of foreigners increases, but it is not statistically significant. While the root industry increases the employment of foreign workers but it is not statistically significant.
Fourth, it was proved that there is no effect of suppressing employment decline of job stability funds. Although employers received job stability funds in 2018 for employers with difficulties in management due to the minimum wage increase, it has been found that the receipt of the grant does not have a statistically significant effect on employment.
Firth, it showed that the working time of foreign workers is longer than that of Korean workers. As a result of the t-test for the analysis of the difference in monthly working hours, the difference in monthly working hours of foreign workers and domestic workers was statistically significant.
In this study, we can not use the DID(Difference in Difference) technique which is widely used in semi-experimental design because Korean’s minimum wage system is applied nationwide. In addition, when the minimum wage is raised, the response to the change in the employer’s employment may not occur immediately. It is necessary to expand the number of specimens in the future research, the range and period the industries to be studied.