Minimum Wage Raised by 1.5% to 8,720 Won This Year... "To Protect Jobs"

Single Proposal by Public Interest Committee Finalized by Vote
Focus on Overcoming COVID-19 Economic Crisis
"Decision to Protect Labor Market and Economic Agents"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] Next year's minimum wage has been decided at 8,720 won, an increase of 1.5% (130 won) from this year. The 1.5% increase rate is the lowest since the introduction of the minimum wage system. This decision reflects the economic downturn and employment crisis caused by the impact of the novel coronavirus disease (COVID-19).

The Minimum Wage Commission decided at the 9th plenary meeting held on the 14th that next year's minimum wage level will be 8,720 won, a 1.5% increase from this year. The 8,720 won proposal was a single plan presented by Chairman Park Jun-sik of the Minimum Wage Commission along with nine public interest members.

Previously, both labor and management judged that it was difficult to narrow the gap between their demands any further and requested the public interest members to present a single proposal. Subsequently, seven user members and nine public interest members voted, with nine in favor and seven against the public interest members' proposal, which was finally approved.

Immediately after the meeting, the public interest members held a press conference to explain the criteria for deciding the minimum wage. They explained that the 1.5% increase rate was the sum of 'this year's economic growth forecast of 0.1%', 'this year's consumer price inflation rate of 0.4%', and '1.0% improvement in workers' living expenses.'

The 1.5% increase rate is the lowest level in 33 years since the introduction of the minimum wage system. During every economic crisis, the minimum wage increase rate has recorded around 2%. During the International Monetary Fund (IMF) bailout crisis from September 1998 to August 1999, the minimum wage increase rate was 2.70%. Right after the financial crisis in 2010, it was 2.75%, and this year, influenced by the US-China trade conflict and Japan's export restrictions, it was decided at 2.87%.

It is analyzed that it was not easy to raise next year's minimum wage level amid the ongoing economic downturn and unemployment crisis caused by the prolonged COVID-19 situation.

Chairman Park Jun-sik stated, "Today's decision was a painful one that holds significant meaning in protecting jobs, the labor market, and economic agents from a long-term perspective, and in strengthening the sustainability of our economy."

Kwon Soon-won, a professor at Sookmyung Women's University and secretary of the public interest members, said, "In uncertain situations, companies first adjust costs by reducing labor. I thought the negative impact on workers would be much greater due to the job reduction effect in the labor market that could occur if the minimum wage rose more than expected."

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