Food and Accommodation Industries: 'Sector-Specific Minimum Wage Differentiation' Labor-Management Deadlock Persists

Business Sector "Wage Payment Ability Gap by Industry"
Labor Sector "Contrary to Minimum Wage System"
Identical to 4th Meeting Two Days Ago

Labor Sector Demands Minimum Wage of 10,800 Won
Business Sector Opposes, "Shock to Small Business Owners"

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Moon Chaeseok] On the 24th, both labor and management sides sharply clashed over the proposal to apply differentiated minimum wages for sectors hit hard by COVID-19, such as food service and accommodation, during the deliberation and resolution of next year's minimum wage. The situation was the same as two days ago. This is the very point that has been going in circles for 34 years since 1988.

The Minimum Wage Commission, a social dialogue body that deliberates and resolves minimum wages, held its 5th plenary meeting at the Government Complex Sejong in the afternoon to continue deliberations on next year's minimum wage.

Ryu Gijeong, Executive Director of the Korea Employers Federation (KEF) and a member of the employers' committee, said in his opening remarks regarding the differentiated application of minimum wages by industry, "Many countries implement this, and since the ability to pay wages varies greatly by industry due to the increased minimum wage level, I ask the public interest committee members for wise judgment so that it can be implemented next year."

The business community argues that by introducing differentiated minimum wage application, industries with insufficient wage-paying capacity, such as accommodation and food service, should have lower minimum wages set.

In Korea, differentiated minimum wage application by industry was only implemented in 1988, the first year the minimum wage system was introduced. At that time, industries were divided into two groups and different minimum wages were applied. The labor side clearly opposed the differentiated application of next year's minimum wage by industry.

Lee Dongho, Secretary General of the Federation of Korean Trade Unions (FKTU) and a member of the workers' committee, criticized, "If minimum wages are paid differently by industry, issues such as industry selection, conflicts between industries, and resulting employment stability problems could arise, causing another exhausting debate and conflict," adding, "It also goes against the absolute standards and principles that the minimum wage system protects low-wage workers."

Park Hee-eun, Vice Chairperson of the Korean Confederation of Trade Unions (KCTU), also pointed out, "There are no rational standards or statistics for (differentiated application by industry)," and said, "If we talk about differentiated minimum wage application by distinguishing industries severely affected during disaster periods, it ultimately means abolishing the minimum wage system itself."

Meanwhile, once the Minimum Wage Commission decides whether to apply differentiated minimum wages by industry, it will begin full-scale discussions on the level of next year's minimum wage. The minimum wage deliberation proceeds by narrowing the gap between the initial proposals submitted by the labor and management sides.

The workers' committee held a press conference just before the plenary meeting and presented an initial demand of 10,800 KRW per hour for next year's minimum wage. This is 23.9% higher than this year's minimum wage (8,720 KRW).

Executive Director Ryu expressed regret over the labor side announcing the initial demand before the deliberation on whether to apply differentiated minimum wages by industry was completed, criticizing, "The demand of 10,800 KRW itself is delivering a huge shock to small business owners and micro SMEs who are barely surviving."

The Federation of Korean Industries (FKI) also commented on the labor side's demand, stating, "It will be a huge burden on small and micro enterprises pushed to the limit," and pointed out, "This will inevitably lead to job losses among vulnerable groups."

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