Negative Economic Impacts of Raising the Minimum Monthly Wage to 2,096,270 KRW

1. **Increased Labor Costs for Businesses**

- Higher minimum wages can lead to increased labor costs for businesses. Small and medium-sized enterprises (SMEs), which often operate on thin margins, may find it challenging to absorb these additional expenses. This can result in reduced profitability or even business closures,

2. **Potential Job Losses**

- To manage higher wage expenses, some businesses might reduce their workforce, leading to job losses. Automation and other cost-cutting measures might be employed, potentially displacing low-skilled workers who are most in need of employment.

3. **Inflationary Pressures**

- Increased labor costs can lead to higher prices for goods and services as businesses pass on the additional costs to consumers. This inflationary pressure can erode the purchasing power of the wage increase, negating some of the intended benefits for workers.

4. **Reduced Competitiveness**

- Higher wages can impact the international competitiveness of Korean businesses, particularly in manufacturing and export-oriented sectors. Companies might struggle to compete with firms in countries with lower wage rates, potentially leading to a decline in export volumes and negatively affecting the trade balance.

5. **Labor Market Distortions**

- A significant increase in the minimum wage can lead to distortions in the labor market, such as an increased supply of labor (more people seeking jobs) while demand for labor (jobs available) might not grow at the same pace. This mismatch can result in higher unemployment rates, particularly among low-skilled and entry-level workers.

In conclusion, while raising the minimum monthly wage to 2,096,270 KRW aims to improve the standard of living for workers, it is crucial to address these potential negative impacts through careful economic planning and supportive policies for businesses.