Kyungbang, a major Korean textile company, deferred its plans to move one of its factories from Gwangju. Among the company’s three factories, the Gwangju factory employs the most workers. As of June 2017, 130 of 360 production workers company-wide are working.
Kyungbang’s board of directors held a meeting on 24 July and decided to move a part of the Gwangju factory’s production line to Vietnam. The decision was due to minimum wage for 2018 being set at KRW 7,530 (USD 6.68) per hour. The company mentioned that it would not be able to bear the 16.4% increase in labor cost brought about by the new minimum wage.
Korean textile companies prefer to invest in Vietnam since its minimum wage is one tenth of Korea’s, and the cost of electricity is only half. However, it was found that the company was discussing layoffs, which would retain only 70% of the 130 manufacturing workers still employed during the process of moving the factory. This discussion triggered a huge controversy.
Kyungbang deferred its plans to move the factory, since it did not want to be known as the first company to stand against the government’s plans to increase the minimum wage. The company also considered labor’s demand to increase minimum wage.