A vegetable vendor sits behind a pile of cabbages at a traditional market in Seoul, June 3. Yonhap

Microbusiness owners are grappling with the prospect of a wage increase outpacing their profits, prompting them to closely monitor ongoing negotiations regarding next year's minimum wage.

According to Korea Federation of Micro Enterprise (KFME), Wednesday, the average labor cost grew 2.44 times faster than sales and operating profits from 2022 until May of this year.

KFME said the average labor cost of microbusinesses totaled 2.76 million won per month in 2022, 2.92 million won in 2023 and 2.95 million won in the January-May period of this year — meaning a 2.2 percent annual increase.

In contrast, their monthly sales averaged 11.9 million won in 2022, 12.3 million in 2023 and 12.2 million in the January-May period, resulting in a 0.9 percent compound annual growth rate in sales over that period.

Operating profit also rose 0.9 percent annually, with monthly operating profit averaging 2.65 million won in 2022, 2.82 million won in 2023 and 2.73 million won in the January-May period.

“The data showed the pace of growth in labor costs was 2.44 times faster than that of sales and operating profit,” the federation said.

It noted that the higher growth of wages compared to profits has impacted hiring across microbusinesses nationwide, highlighting that the average number of workers at each microbusiness decreased from 2.2 in 2022 to 2.1 in 2024.

“These businesses may find it increasingly challenging to cope with the minimum wage if it is raised next year,” the federation said.

The finding comes in the midst of tripartite negotiations among the government, management, and labor sides concerning the 2025 hourly minimum wage.

This year's wage is 9,860 won, and next year's amount can easily surpass 10,000 won if inflation is taken into account.

In a survey taken by KFME, 64.9 percent of microbusiness owners nationwide responded that the 2025 minimum wage should be lowered from the current level.

By sector, 73.7 percent of barber shop and hair salon owners wanted the minimum wage to be lowered.

Some 73.5 percent of convenience store or mom-and-pop store owners called for a cut in the minimum wage, while 72 percent of internet café operators gave the same response.

“The minimum wage should be determined by considering unfavorable business conditions faced by microbusinesses, because otherwise they may have to shut down their businesses,” the federation said.

It also said microbusinesses should be given a chance to explain their circumstances to representatives of the three-party talks on the minimum wage.