South Korea opposes increasing salaries to boost economy

South Korea’s finance minister Hyun Oh-seok on Friday voiced his opposition to the idea that increasing the salaries of workers could boost overall economic conditions, apparently objecting to a similar policy being undertaken by Japan. Japan has provided tax incentives for companies whose spending on salaries expanded a policy intended to raise income levels and boost domestic demand and economic recovery. Seen as successful in bolstering its slumping economy, the country is reportedly considering expanding such tax incentives. “We are different from Japan, which chose to induce salary growth in the face of deflation, but it is difficult to say that we are in a state of deflation now,” Finance Minister Hyun Oh-seok was quoted by South Korean Yonhap news agency as saying. His remarks came in response to an argument by Rep. Moon Jae-in of the main opposition Democratic Party that it is time for the government to think about raising the level of salaries of low and mid-income people in order to bolster weak domestic demand. Moon asked if the government would consider Japan’s policy aimed at raising the salaries of workers. “An excessive increase in salaries could result in reducing employment, which eventually could end up cutting disposable income for people,” Hyun said. “It is more desirable to push for a virtuous cycle where employment leads to more income, more income leads to more consumption and more consumption leads to more salaries,” he added. Hyun also expressed his reservation against the idea of raising the minimum wage, saying that a hike could have a significant impact, especially on small companies.