Between 10,800 Won and 8,720 Won... Labor-Management Tug of War at the 7th Meeting

Labor and Management at an Impasse... 'Withdrawal of Freeze Proposal' vs 'Firm Freeze'
Labor: "Based on Household Living Expenses" vs Management: "Determined to Uphold Freeze with Resolute Spirit"
Labor: "Economy Recovering" vs Management: "Small Businesses and SMEs Face Payment Capacity Limits"

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Moon Chaeseok] On the 6th, the labor and management sectors continued a tense tug-of-war over how much to set next year's minimum wage. The labor sector pressured the management to "withdraw the freeze proposal," while the management expressed a solemn determination, saying, "We will definitely uphold the freeze with the spirit of Pabu-chimju (breaking the pot and sinking the boat to fight to the death on the battlefield)."

The Minimum Wage Commission, a social dialogue body that deliberates and decides on the minimum wage, held the 7th plenary meeting in the afternoon at the Government Sejong Complex to discuss next year's minimum wage. In this meeting, the worker representatives, employer representatives, and public interest commissioners continued discussions on the minimum wage level based on the initial proposals submitted by both labor and management. At the 6th plenary meeting on the 29th of last month, the labor sector submitted an initial proposal of 10,800 won per hour, which is 23.9% higher than this year's minimum wage of 8,720 won per hour. The management proposed the same 8,720 won as this year, demanding a 'freeze.'

The labor and management sectors repeated their existing positions, presenting completely different grounds: "The freeze is absolutely unacceptable" versus "We will enforce the freeze." Lee Dong-ho, Secretary General of the Federation of Korean Trade Unions (FKTU) and a worker representative, urged the management to withdraw the freeze proposal during his opening remarks, stating, "Cutting or freezing the minimum wage disregards the minimum wage system, which is meant to stabilize the lives of low-wage workers."

He added, "Under the current Employment Insurance Act, 80% of the minimum wage is set as the lower limit for unemployment benefits, which is 60,120 won. This amount was calculated based on the 2019 minimum wage of 8,350 won. If the minimum wage does not increase by more than 7.8% this year (to 9,400 won), the unemployment benefit will be frozen for the fourth consecutive year."

Park Hee-eun, Vice Chairperson of the Korean Confederation of Trade Unions (KCTU), attended the meeting wearing an orange T-shirt inscribed with "Inequality treatment is the minimum wage vaccine." Park argued, "The COVID-19 crisis has intensified economic inequality and polarization. To resolve this, a significant increase in the minimum wage leading to income growth and consumption stimulation is the way to overcome the current disaster."

She continued, "On the 28th of last month, the government announced the economic policy direction for the second half of the year, forecasting a 4.2% economic growth rate and a 1.8% inflation rate. However, the proportion of low-wage workers is still increasing due to the multi-tier subcontracting structure centered on large conglomerates, and Korea's minimum wage is the lowest among OECD member countries." She added, "The KCTU once again demands that the minimum wage level be aligned with household living expenses."

The management questioned how the minimum wage could be raised when small business owners and micro and small enterprises are pushed to their 'limit.' Ryu Ki-jung, Executive Director of the Korea Employers Federation (KEF) and an employer representative, described the labor sector's initial proposal as "an unreasonable demand close to despair for small business owners and micro enterprises who risk their lives daily to make a living." He warned that if the minimum wage increases, jobs for vulnerable groups such as part-time workers, the elderly, and housewives could disappear.

Ryu cited a survey by the Small Business Association, revealing that about 86% of small business owners and small enterprises find management costs (wages, four major social insurances, etc.) the most burdensome. He noted that unfairness in large corporate franchises accounted for only 8%, countering Vice Chairperson Park's argument. He also said, "The labor sector claims that to achieve an average annual minimum wage increase of 7.5% under the current government, higher than the previous government's 7.4%, the minimum wage must rise by more than 6.3% next year (to 9,270 won). However, the previous government's average annual economic growth rate of 3% and the current government's 2% are clearly different."

Lee Tae-hee, Director of the Smart Job Headquarters at the Korea Federation of SMEs, said, "From the perspective of micro and small enterprises and small business owners, even the current minimum wage level is unaffordable, and all employer representatives, including myself, are well aware of this." He emphasized, "(The management) will do everything possible with the spirit and determination of 'Pabu-chimju' to uphold the minimum wage freeze."

Meanwhile, at the plenary meeting on the 29th of last month, heated exchanges reportedly led to intense remarks. Vice Chairperson Park mentioned this in her opening remarks, pointing out that worker representatives had to endure "remarks close to abusive language." In response, Chairperson Park Joon-sik said he would express his position at a later opportunity and urged, "Labor and management representatives should approach the deliberations with an open attitude to understand each other's positions."

Deliberations on next year's minimum wage have already passed the legal deadline at the end of June. Considering that the minimum wage announcement deadline is July 5, the minimum wage for next year must be decided by at least mid-June.

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