Deen Islum, a 34-year-old worker from Bangladesh, now expects his life here to improve, as South Korea’s minimum wage is set to increase by 16.4 percent next year.

“I think the minimum wage hike would be good for me. When I asked my boss to raise the wage, the boss has refused it,” Islum told The Korea Herald. “The legal minimum wage hike will allow me to take home more money.”

Islum said that he does a very “difficult” job at a stone processing factory, spending some 11 hours a day at work and taking only Sundays off because the current wage is just “too low.”

Next year’s minimum wage has been set at 7,530 won ($6.70) per hour, up 16.4 percent from this year, in step with President Moon Jae-in‘s drive to achieve an hourly minimum wage of 10,000 by 2020.

Under the Labor Standard Act, all workers, regardless of their race, nationality and gender, are subject to the minimum wage.

As of May 2016, there are some 962,000 foreign workers in Korea. Among them, 48.7 percent are paid between 1 million won and 2 million won per month, and are to be affected by the minimum wage hike.

Nearly 280,000 foreign workers are hired at factories, farms and orchards in the country under the Employment Permit System as of 2016. The EPS was put into force in 2004 to fill low-skilled positions facing short local supply with migrant workers from 13 countries in southeast and central Asia.

“It is not a dramatic raise, but many migrant workers expect that they can get more money for the same job they do,” Shekh al-Mamun, a Bangladeshi official from Korea’s first migrant workers’ union. “The minimum wage raise is not a disadvantage for employers too, because migrant workers will have higher productivity.”

“But my concern is that it won’t be strictly enforced in reality as many workers are already being underpaid amid a lack of monitoring by the government,” he said.

While migrant workers largely welcomed the wage raise, their employers -- mostly small and medium-sized enterprises, as well as farms -- have voiced concerns that the hike will take a toll on their businesses.

“It is impossible for me to hire Koreans for the wage we pay foreign workers. I cannot run a business without foreign workers,” said a vegetable farmer, who owns 33,100-square-meter field in Goyang, Gyeonggi Provicne. He employs three foreign workers. 

“There will be many farmers who give up farming if the minimum wage increases at such a fast pace. It eventually poses a threat to the nation’s food security,” he said. “I think that the minimum wage should be set lower for foreigners than for Koreans.”

The wage increase will additionally cost 1.75 trillion won for small and medium-sized enterprises that hire foreign workers, the Korea Federation of SMEs said Tuesday.

The figure is based on the calculation that some 280,000 foreign workers, who are on the EPS, work an average 209 hours per month and their monthly wage will increase by 332,891 won.

“The minimum wage hike means that it would put more financial burden on SMEs (while only benefitting foreign workers),” said Chung Wook-jo, an official in charge of personnel policy at the Korea Federation of SMEs.

Employers, especially SMEs, have claimed the minimum wage could lead to soaring production costs and possible job losses. Workers, on the other hand, had called for a drastic hike to curb the nation’s income inequality and improve living conditions for low-income workers.

The government on Sunday said that it will spend some 3 trillion won to help smaller businesses offset an increase in labor costs, after the next year’s minimum hourly wage was raised by the biggest margin since 2000.

“The SMEs complain that expenses for accommodation and meals provided by employers are not included in the minimum wage,” said Noh Mean-sun, researcher at Korea Small Business Institute.

“It is necessary to discuss the scope for the minimum wage.”

In terms of foreign workers’ job security, an expert said that they will not lose their jobs due to the wage raise.

“There are yet no Koreans who are likely to replace foreign workers working under such (poor) conditions for such low pay,” said Oh Sang-bong, a research at the Korea Labor Institute.

”It is rather those on F-4 visa in the service sector who could possibly be replaced by locals.“

The F-visa holders, together with H-2 Visa holders, who are ethnic Koreans holding foreign nationalities, make up the biggest groups of foreign workers in Korea, standing at 630,500.

By Ock Hyun-ju (laeticia.ock@heraldcorp.com)