The company was closed down by the local governments, and warehouses came in.

Following the closing of small and medium enterprises

On the 7th of March, three welders were welding large steel plates for a large steel mill at W Shoe Factory in Geumjeong-gu, Busan. "I was originally a shoe manufacturing company, but I bought a lighting company last October and am currently converting it into a warehouse," said one construction company employee.

Inside the factory, I could not find any trace of making shoes. W Shhwa, who was the owner of this factory, was a good small and medium sized company, which was selected as 'excellent company of Busan Metropolitan City'. The company hired 80 employees and recorded annual sales of 18 billion won to 20 billion won. However, it sold its factory in September after falling into financial difficulties due to the minimum wage increase.

 

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The shoe factory disappeared and was converted into a warehouse. - The front door of the W Shae factory in Geumjeong-gu, Busan, Korea, is tightly closed on the 7th of last month. In the factory, one construction company employee is converting the existing shoe factory into a logistics warehouse of the lighting company (pictured below). The company, which had difficulty in paying the labor cost due to the minimum wage increase, sold its factory to lighting companies last September and folded its business. / Dong Hwan Kim
The representative of the company said, "Last year, employee wage increase exceeded 300 million won, and it is estimated that 500 million to 600 million won is needed this year." Before the deficit widened, the factory was sold to pay back the loan and closed the business. " . The company had an OP margin of 10% until the IMF crisis, but has been in the red for two or three years or has just lost its deficit. Lee said, "As the government continues to raise the minimum wage, the situation sharply deteriorated and the factory was hastily organized."

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The average plant utilization rate of Busan Noksan Industrial Complex, where equipment and automobile parts manufacturers are located, is at the level of 60%. There are hanging banners throughout the industrial complexes to sell or lease factories. An official from the shoe association said, "Between foreign famous brands and Chinese low-priced products, they are only staying in the way of OEM (order production)", and "the CEOs say that they will die because of the minimum wage". An official at Busan Metropolitan City said, "It is not the job today yesterday that the manufacturing industry is difficult, but it is the first time that the representatives of SMEs are the worst."

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Due to the increase in the minimum wage, small and medium-sized enterprises are not able to hire even if their work increases. A factory automation company in Changwon, Gyeongnam Province recently decided not to hire new workers even though they need additional manpower. The representative of the company said, "The increase in the minimum wage has increased the burden on the regular workers, so we are inevitably using 20 daily workers who are sent by the labor force." It is not possible to hire full-time full-time workers because there is no guarantee that business will continue. He said, "Even now, after paying the labor cost, there is not anything left, so it is difficult to pay overtime because it is not enough to pay overtime." Three years ago, the night shift allowance was 8,000 won per hour, but from next year it should be 12,500 won.