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Minimum wage rise in South Korea prompts automated response

President Moon's 'worker-friendly' policy is pushing clerks out the door

The cashier-less shop operated by E-Mart24 in Seoul (Photo by Sotaro Suzuki)

SEOUL -- I recently visited an "unmanned" convenience store that opened near my office in Seoul. When you swipe your credit card at the entrance, the door opens automatically.

After you pick up your items, you go to a cashier-less checkout counter and use a bar code scanner to ring up your purchase. Then you pay with a credit card reader. It was surprisingly simple.

"Wow, we have no problem without staff" in the shop, said a colleague who accompanied me on my shopping expedition. The cashier-less shop is operated by E-Mart24, a unit of South Korean retail conglomerate E-mart. The test stores are directly managed and opened last June.

The company plans to use the cashier-less system in more of its outlets once the pilot program ends. Korea Seven, which operates the 7-Eleven convenience store chain in the country, also opened an unmanned outlet last May.

Cashiers appear to be on the way out when it comes to convenience stores in South Korea. One major reason is rising labor costs. In January, the minimum wage was raised by 16% to 7,530 won ($7) an hour, a much sharper increase than the average 7% rise over the past five years.

The minimum wage boost is part of an effort by President Moon Jae-in to stoke economic growth by pushing up incomes and consumer spending. Moon has promised to eventually raise the minimum wage to 10,000 won an hour.

But the move was a body blow to many businesses, especially small restaurants, convenience stores and other retailers. Higher labor costs have left them facing a choice between raising prices and reducing staff. Most convenience stores are run by self-employed people under franchise agreements with the chain operators.

The cost pressures could force franchisees to ax employees and work longer hours themselves.

Unmanned shops are seen as a potential solution. Hamburger chains in South Korea, including Lotteria, McDonald's and Burger King, have been setting up more semiautomated outlets where customers use touch-panel devices to order and pay. All the employees do is prepare the food and hand it over.

Moon was elected on a campaign platform that made job growth his top priority. After he was sworn in, a board was set up in the president's office showing all major employment indicators, including the unemployment rate, to underscore his commitment to job creation. So far, his efforts have failed to move the needle much.  

Rules meant to improve working conditions for employees generally put pressure on companies' bottom lines. The government's well-intentioned measures could, ironically, accelerate the trend toward automated retail outlets and factories.

Moon's government may have to rethink the balance between supporting workers and promoting businesses by paying more attention to the voices of industry.

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