Minimum Wage Sends Unemployment To 9 Year Peak In South Korea

 A reader sent me this thank you.

vanishing jobs hitting Asia’s fourth largest economy 

South Korea’s unemployment 9 year high of 4.4% in Jan 
highest since 4.7%  in Jan 2010

minimum wage job losses hitting self-employed businesses

manufacturers hire even fewer workers, downturn continues

hike in minimum wage led to drop in low-paying jobs
most job losses in manufacturing, construction 

further pressure on economy, deepens frustration for President 

29% hike in minimum wage over only 2 years 
drop in low-paying jobs across retail, construction 

blow to economy already grappling with slowing exports
Exports declined in Jan, third month in a row

adding to strains for manufacturing,  services sector 

Effective Jan, min wage up 10.9% to US$7.46 / hr
following a 16% increase in 2018 

manufacturing hardest hit in Jan   
shedding 170,000 jobs from year earlier
Construction lost 19,000 jobs, retailers 67,000 jobs 

jobless adds to policy frustrations, political challenges 
President's approval rating dropped sharply 

falling exports, slowdown, weak labor market poses further risk 

My comments :  Thank you to the reader who sent me this link.

In the previous post we saw that minimu wage hikes are creating unemployment in low skill and entry level jobs in New York, Boston and other states in the USA - the world's No. 1 economy.

Now South Korea is also being hit by higher unemployment, the highest in 9 years, caused largely by the Minimum Wage hikes.

Both South Korea and the US are relatively mature and industrialised economies. We can safely say that a large number of their workers are at above Minimum Wage level of skills. I would think that all or almost all the skilled workers and technicians in Hyundai, Kia etc would be at above Minimum Wage level. Yet Minimum Wage hikes still cause unmployment to shoot up in South Korea.

Then what about Malaysia? We are a low tech economy. We are very dependent on manual labour inputs. We are closer to a Minimum Wage level type of economy. Low skill levels.

Certainly Minimum Wages are going to impact Malaysia worse than in South Korea or the USA. 

Here is more not good news :

This is perhaps one of the few countries in the world where economic policy is set by people who have little or no understanding of economics. We have people in charge of the economy who do not understand business or finance. 

We have gone through 50 years of a New Economic Policy which is not described in any economics textbook. 

We are not an "orang kaya" economy where the time is ripe to debate 40 hour work weeks, "mandatory" flexi-working hours, 90 days "paid" maternity leave for mums, paternity leave for fathers and such fancy notions. 

If our workers' productivity and output can match the productivity of Scandinavia, the US or Japan then we too can "afford" such luxuries. But our average productivity is actually going down. we are Third World ok.  Our university graduates now work as clerks in three star hotels because that is where their skill levels match the job. Saya bukan joking ok. 

I just had lunch with an old 'perjuangan' friend  who talks about "nasi bujang lapuk".  If nasi bujang is plain rice with one vege and maybe telur goreng, nasi bujang lapuk is plain rice and some kuah on it. Its back to nasi kicap folks.

In such a situation it is quite ridiculous to set Minimum Wages. The Minimum Wages is now killing off businesses. Many businesses are closing down because the type of economic output and productivity in our economy does not generate the type of business cashflows which can afford Minimum Wages.

Even South Korea and the United States are suffering hikes in unemployment because of Minimum Wages.

But as I said huge advanced economies like the US and South Korea have a large 'above Minimum Wage' workforce that produces and exports high tech, high value added goods. Minimum Wage will not sink South Korea and the US.

Its a different story in Malaysia. 

Kulasegaran will not understand what I am saying. 
Neither will Azmin. Someone has to listen carefully.