Increased minimum wage causing replacement of cashiers with automated system

In the city of Sejong, south of Seoul, a man in his 50s named Kim Hyeon-sik manages an unmanned convenience shop.

He claims that after he made the decision to run an unmanned business, the annual increase in the hourly minimum wage ceased bothering him.

“I’m not sure why I didn’t purchase the tool to complete the task earlier. The rising minimum wage would never be a persistent worry for me, “said said.

About 200,000 part-time employees at the nation’s convenience stores might be replaced by machines in the upcoming months, according to Kye Sang-hyeok, president of the Convenience Store Franchisees’ Association. The state-mandated minimum wage will increase by 5%, or 460 won, to 9,620 won ($7.41) per hour, the government said on June 30.

According to Kye, more store owners are putting in kiosks to take the place of cashiers, and more will be tempted to run unmanned stores to save labor expenses in order to make ends meet.

As of last month, the four convenience store companies—GS25, CU, 7-Eleven, and Emart24—operated 2,783 unmanned convenience stores, which is a 14-fold increase from the 200 in 2019. The number of 2,125, which is more than four times the 499 in 2020, shows that the increase was most pronounced in the previous year.

From 140 in 2020, the number of unmanned convenience stores run by GS25 increased to 723 last month. This year, it intends to add 250 more. In addition, 7-Eleven, which adopted unmanned outlets first in 2017, currently has 330. Emart24 has 1,050 unmanned locations in 2018 compared to 85 in 2019.

Some claim that the minimum wage rises under the previous Moon Jae-in government were the cause of their rapid development. From 6,470 won in 2017, the amount rose to 9,160 won this year.

The minimum wage in Korea has climbed by a total of 41.6 percent over the previous five years, which is four times greater than the average growth in consumer prices of 9.7 percent over the same period, according to the Korea Enterprises Federation (KEF), which represents companies.

According to OECD data published by the KEF, Korea’s minimum wage as a percentage of its median salary this year was 62.6 percent. The U.S., the U.K., Germany, and Japan were Korea’s advanced global competitors with this figure being up to 31 percentage points higher.