Discussions on Next Year's Minimum Wage to Start Soon... 'Rough Road' Expected Due to COVID-19 Variables

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] The Minimum Wage Commission is officially commencing the deliberation process for next year's minimum wage. It is expected that both labor and management will engage in intense debates over the impact of the novel coronavirus disease (COVID-19) on the economy and employment conditions.

According to the Ministry of Employment and Labor on the 28th, Minister Lee Jae-gap plans to request the Minimum Wage Commission to deliberate on next year's minimum wage early next week. The current Enforcement Decree of the Minimum Wage Act stipulates that the Minister of Employment must request the minimum wage deliberation by March 31 each year.

Upon receiving the request, the Minimum Wage Commission will enter the deliberation process and decide on next year's minimum wage. The Minister of Employment must finalize and announce it by August 5.

This year's minimum wage is 8,590 KRW per hour, which is a 2.9% increase from last year. This is the third-lowest increase rate in history, following 2.7% in 1998 during the height of the International Monetary Fund (IMF) financial crisis and 2.8% in 2010 right after the global financial crisis.

[Image source=Yonhap News]

Next year's minimum wage deliberations are expected to be strongly influenced by the variable of the COVID-19 pandemic.

The labor sector, which has been demanding the prompt realization of a 10,000 KRW minimum wage, was expected to demand a significant increase in next year's minimum wage citing this year's low increase rate, but the COVID-19 situation has increased the likelihood of them being on the defensive.

The management sector is expected to launch an offensive, demanding a freeze on the minimum wage, citing the rapidly weakened ability of self-employed and small business owners to pay wages due to the COVID-19 pandemic.

Some international credit rating agencies have projected South Korea's economic growth rate for this year to be negative, and with the economic outlook darkened by the COVID-19 pandemic, it has become difficult for the argument for a significant minimum wage increase to gain traction.

However, since the COVID-19 pandemic has also increased the livelihood burden on low-wage workers, following only the management's demands could result in shifting the pain of the COVID-19 crisis onto low-wage employees.

The Minimum Wage Commission is expected to make a more difficult decision than ever amid fierce push and pull between labor and management.

Meanwhile, if the COVID-19 pandemic prolongs, the need to continue 'social distancing' may also become a factor complicating the minimum wage deliberations.

This content was produced with the assistance of AI translation services.