Let's prevent the 'war of the weak' by subsidizing the minimum wage

South Korea's economy is grappling with a profound crisis, not just a slowdown in growth, but a deep-seated issue of extreme income and asset polarization that has eroded the middle class over the past three decades. This has led to a decline in "human capital" formation and a sense of hopelessness among youth, contributing to the nation's low birth rate and demographic decline.

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The most fatal danger facing the South Korean economy is not simply a slowdown in indicators. The extreme polarization of income and assets accumulated over the past 30 years since the IMF foreign exchange crisis, and the resulting collapse of the middle class and the overall weakening of the ability to form 'human capital,' is the real essence.

The author proposes a paradigm shift in the minimum wage system, advocating for a significant increase to 12,000 won per hour by 2027. Crucially, the government would directly subsidize 20% of this increase (2,400 won per hour) for small businesses and self-employed individuals. This would reduce the actual burden on employers to 9,600 won per hour, even lower than the 2023 minimum wage, thereby safeguarding their livelihoods. For workers, this translates to a stable monthly income exceeding 2.5 million won, or an annual salary of 30 million won, providing a structural boost to household income amidst high inflation.

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The paradigm shift in the minimum wage system must be the starting point for that innovation.

Implementing this "minimum wage subsidy system" would require an estimated 24 to 30 trillion won annually. The author suggests creating an independent "polarization innovation fund" of this scale, without resorting to general tax increases on individuals or businesses. Instead, the proposal focuses on rationalizing the tax structure and improving budget efficiency.

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The 'minimum wage subsidy system,' where the national treasury directly supports 20% of the increase (2,400 won per hour), should be implemented.

Specifically, the plan calls for normalizing real estate holding taxes by increasing the effective holding tax rate to 0.22% (two-thirds of the OECD average) and adjusting the assessment ratio for commercial buildings to reflect their market value more accurately. This could generate approximately 20 trillion won annually by recapturing "unearned income." Additionally, the author proposes adjusting the automatic linkage rate for local education grants from the current 20.79% to 18.00%, freeing up about 10 trillion won annually. This reallocation would support the structural income stability of vulnerable populations, echoing the spirit of Franklin D. Roosevelt's New Deal.

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The real effective holding tax rate on real estate assets should be raised to two-thirds of the OECD average (0.22%).