Minimum Wage Reform Proposals Follow One Another... Opposition: "Reflect Growth Rate, Let Government Decide" Ruling Party: "Elevate Wage Commission"

[Asia Economy Reporter Park Cheol-eung] The ruling and opposition parties in the political arena are consecutively proposing amendments to the Minimum Wage Act. The opposition views the rapid increase in the minimum wage as having a negative impact on the economy, basing their stance on objective figures such as economic growth rates, and propose that the government directly suggest the rate of increase to enhance accountability. The ruling party has proposed a bill to elevate the wage policy committee to be under the president and allow the National Assembly to recommend public interest committee members. This appears to be an effort to strengthen the role of the ruling party, which holds an overwhelming majority of seats.

According to the National Assembly on the 26th, Yoon Hee-sook, a member of the Future United Party, proposed an amendment to the Minimum Wage Act the day before, changing the current minimum wage determination criteria of "worker living expenses, wages of similar workers, labor productivity, and income distribution rate" to "average wage increase rate, economic growth rate, inflation rate, unemployment rate, and corporate bankruptcy rate."

The bill also includes a provision for the government to present its opinion on the rate of increase when requesting a review of the minimum wage. Under the current law, the Minister of Employment and Labor decides based on the resolution passed by the Minimum Wage Commission.

Yoon explained the background of the proposal, saying, "We want to clarify the government's involvement in the minimum wage decision process, disclose the full minutes of the committee meetings to strengthen accountability, and satisfy the public's right to know." He also argued, "The minimum wage bomb, which increased by 30% in the first two years of the current administration, has damaged the economic structure. The labor cost burden on small business owners, small merchants, and SMEs has increased, and labor stability is threatened due to workforce reductions and the surge in unmanned ordering machines." Yoon, an economist who served as head of the Fiscal Welfare Policy Research Department at the Korea Development Institute (KDI), has been active, gaining attention with his five-minute speech in the National Assembly titled "I am a tenant."

Earlier, Kwon Seong-dong, an independent lawmaker, proposed a bill last month that would allow the government, specifically the Minister of Employment and Labor, to decide the minimum wage. He suggested that the Minimum Wage Commission's review should only be a procedure to hear labor and management opinions. Kwon was elected after leaving the United Future Party before the last general election.

Kwon pointed out, "The government has the authority to appoint public interest members of the Minimum Wage Commission and implicitly influences the minimum wage decision process, yet it is bound by the review results and has no final decision-making authority, so it has no obligation to explain or political responsibility."

He also included provisions to base the decision criteria on economic growth rates and the impact of the minimum wage on prices and employment, and to set minimum wages according to the type and scale of business and by region.

Meanwhile, Park Kwang-on of the Democratic Party proposed an amendment on the 20th to reorganize the committee as a wage policy committee under the president. The structure would have the committee, not the Minister of Employment and Labor, make the final decision.

The committee would be able to comprehensively review appropriate wage gaps between large and small businesses, wage policies for workers, and economic and social policies that significantly affect these. It also includes provisions for the president to appoint or commission public interest members recommended by the National Assembly. This seems aimed at increasing government accountability and expanding political involvement. Park said, "There is a need to improve the expertise and fairness of minimum wage decisions and to reorganize the affiliation, composition, and functions of the Minimum Wage Commission to feed decisions related to the minimum wage back into important policy processes concerning workers' wages."

The minimum wage increase rate confirmed last month for next year is 1.5%, the lowest since the minimum wage system was introduced in 1988. Under the Moon Jae-in administration, the increase rates were 16.4% in 2018 and 10.9% in 2019, marking two consecutive years of double-digit increases, then dropped to 2.87% this year, and have fallen again.

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