'34 Years of Idling' Differential Application of Minimum Wage by Industry... No Labor-Management Agreement Reached (Comprehensive)

Business Sector "Large Disparities Between Industries" vs Labor Sector "Worsening Polarization in Labor Market"
Initial Minimum Wage Proposal Submitted on 24th... Labor Sector to Propose 'Over 10,000 Won'

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Moon Chaeseok] The issue of applying differentiated minimum wages by industry, which has not passed the threshold of the Minimum Wage Commission for 34 years since 1988, still shows a significant gap between labor and management positions. No conclusion was reached at the 4th plenary meeting on next year's minimum wage.

The Minimum Wage Commission (MWC), a social dialogue body that deliberates and decides on the minimum wage, discussed on the 22nd whether to apply differentiated minimum wages by industry for next year but failed to reach a conclusion due to the sharp differences between labor and management. The MWC held the 4th plenary meeting at the Government Complex Sejong the previous afternoon to discuss the application of differentiated minimum wages by industry for next year.

The management side argued that differentiated application of the minimum wage should be introduced, setting lower minimum wages for industries with insufficient wage-paying capacity such as accommodation and food services, but the labor side opposed it, saying it goes against the purpose of the minimum wage system.

In Korea, differentiated application of the minimum wage by industry was only implemented in the first year of the minimum wage system in 1988. At that time, industries were divided into two groups with different minimum wages applied. Group 1 included 12 industries such as food, textiles, and electronic devices, while Group 2 included 16 industries such as printing and publishing, industrial chemicals, and steel. For more than 30 years since then, the plan for differentiated application by industry has not passed the MWC threshold. This contrasts with countries like the United States, Canada, Japan, Belgium, and Australia, where differentiated minimum wages are applied.

Ryu Ki-jung, Executive Director of the Korea Employers Federation (KEF) and a management committee member, stated in his opening remarks, "Retail, accommodation and food services, service industries, small and micro enterprises, and small business owners are still struggling, and the industry gap in the minimum wage underpayment rate (the proportion of workers paid below the minimum wage) is large due to the uniform increase in the minimum wage," arguing for the necessity of differentiated application by industry.

Lee Dong-ho, Secretary General of the Federation of Korean Trade Unions (FKTU) and a labor committee member, criticized the differentiated application by industry, saying, "It can lead to a stigma effect on certain industries, causing a decrease in labor force and other forms of discrimination," and "It also deepens labor market polarization, which goes against the purpose of implementing the minimum wage."

Ultimately, the MWC failed to narrow the gap between labor and management and decided to continue discussions at the 5th plenary meeting on the 24th.

On the same day, the MWC reached an agreement on the unit for deciding next year's minimum wage. Next year's minimum wage will be set on an hourly basis as before, with the monthly converted amount also indicated. The monthly conversion applies 209 hours of monthly working time, including weekly holiday hours.

Earlier, at the 3rd plenary meeting on the 15th, the labor side proposed deciding next year's minimum wage on a monthly salary basis with the hourly wage indicated, but the management side insisted on deciding only on an hourly basis, failing to find common ground. However, at this meeting, under the leadership of the public interest committee members, the existing method was maintained without a vote.

Chairman Park Joon-sik requested both labor and management to submit their initial proposals for next year's minimum wage by the 5th plenary meeting on the 24th. The minimum wage negotiation proceeds by narrowing the gap between the initial proposals submitted by both sides. The labor side plans to hold a press conference to announce their initial proposal just before the 5th plenary meeting. It is known that the two major trade unions have set an initial proposal of over 10,000 won. The labor side has proposed an initial demand of over 10,000 won every year since 2015. The management side is likely to propose an initial demand at a frozen level (8,720 won) again this year.

Labor and management sharply clashed over the appropriate level of next year's minimum wage.

Park Hee-eun, Vice Chairperson of the Korean Confederation of Trade Unions (KCTU), called the recent KEF report claiming there are no factors for raising next year's minimum wage "nonsense" and proposed a TV debate between labor and management. In response, Executive Director Ryu emphasized, "Even looking at the last 3 to 5 years, the minimum wage has been excessively raised without considering labor productivity," and added, "I hope to maintain a stable stance regarding the minimum wage level."

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