First Minimum Wage Review on the 11th... Labor and Management Interpret COVID-19 Situation Self-Servingly (Comprehensive)

Park Junsik, Chairman of the Minimum Wage Commission [Photo by Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] The first deliberation of the Minimum Wage Commission to decide next year’s minimum wage will begin on the 11th. This year, both labor and management sides are expected to engage in heated debates focusing on the impact of the COVID-19 pandemic on the economy.

The business sector, facing a crisis due to COVID-19, insists that the minimum wage should be lowered or frozen, while the labor sector firmly argues that at least an increase should be maintained.

According to the Ministry of Employment and Labor on the 8th, the Minimum Wage Commission will hold a plenary meeting at 3 p.m. on the 11th at the Government Sejong Complex to officially start deliberations on the minimum wage to be applied next year. The commission is holding the meeting after completing the appointment of six new worker representatives. The worker representatives had collectively resigned last year in protest of the minimum wage increase rate decided then (2.9%).

The newly appointed worker representatives are Kim Yeon-hong, Planning Director of the Korean Confederation of Trade Unions (KCTU); Kim Young-hoon, Organization Director of the National Public Union Federation; Yoon Taek-geun, Vice Chairman of KCTU; Lee Dong-ho, Secretary General of the Federation of Korean Trade Unions (FKTU); Jung Min-jung, Secretary of the Mart Industry Union; and Ham Mi-young, Head of the Childcare Branch of the Public Transport Union.

The newly appointed members will serve from their appointment date, June 5 of this year, until May 13 of next year, covering the remaining term of their predecessors, about one year, during which they will be responsible for deliberating and deciding on the minimum wage. The remaining 18 public interest and employer representatives and 3 worker representatives will continue their activities until the end of their terms without changes.

The key issue in next year’s minimum wage discussions is expected to be the economic impact of COVID-19. The business sector argues that the ability to pay wages has weakened due to the pandemic, making it difficult to raise the minimum wage.

According to a survey conducted from the 6th to the 13th of last month by the Korea Employers Federation and the Korea Federation of Small and Medium Business, 88% of 600 major domestic small and medium enterprises expressed opinions that the minimum wage for next year should be frozen or lowered. Specifically, 80.8% said it should be frozen, and 7.3% said it should be lowered.

On the other hand, the labor sector insists that the minimum wage should be raised to an appropriate level to support low-wage workers struggling due to COVID-19. They argue that increasing consumption by low-wage workers affected by the minimum wage will revive domestic demand and stimulate the economy.

A representative of the Federation of Korean Trade Unions stated, "Freezing the minimum wage shifts the economic crisis onto low-wage workers again and sacrifices them. Freezing the minimum wage sacrifices low-wage workers, making their lives difficult and shrinking consumption, which only worsens the economy."

Both labor and management sides are interpreting the COVID-19 situation in a self-serving manner. Accordingly, it is expected that next year’s minimum wage deliberations will face difficulties due to the clear differences in positions between the two sides.

Considering that the deadline for announcing the minimum wage is August 5, the deliberations for next year’s minimum wage must be completed by mid-next month at the latest. Under the current administration’s policy of raising the minimum wage, the minimum wage was increased by 16.4% in 2018 (based on the application year) and 10.9% in 2019, but this year the increase rate was lowered to 2.9%.

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