Minimum Wage '10,800 Won vs. 8,720 Won' Amendment Submitted... 8th Meeting Labor-Management Tug of War Continues

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Moon Chaeseok] On the 8th, the labor and management sectors continued a tense tug-of-war over how much to set next year's minimum wage. The labor side's demand to "withdraw the freeze proposal" and the management side's insistence that "it must be frozen" remained unchanged, and both sides presented their arguments based on completely different economic indicators. At the 8th plenary meeting held that day, both labor and management presented revised proposals from the draft '10,800 KRW per hour (23.9% increase) - 8,720 KRW (freeze),' but it was reported that there was still a significant gap in opinions.

The Minimum Wage Commission, a social dialogue body that deliberates and decides on the minimum wage, held the 8th plenary meeting in the afternoon at the Government Complex Sejong to discuss next year's minimum wage. At the request of Chairman Park Junsik, both sides were required to submit revised proposals to their initial demands for next year's minimum wage during this meeting. Previously, at the 6th meeting on the 29th of last month, the labor side initially demanded 10,800 KRW per hour, while the management side proposed the same amount as this year's minimum wage, 8,720 KRW. Chairman Park may request second and third revisions and can suggest a 'deliberation promotion range' within which revised proposals should be submitted. If it is difficult to find common ground, the decision is likely to be made by a vote rather than consensus. In this case, it is expected that the nine public interest members among the 30 commissioners will play a decisive role in the decision-making process.

At the meeting, Lee Taehee, head of the Smart Job Division at the Korea Federation of SMEs, representing the employer side, conveyed the voices from small and medium-sized enterprises struggling due to regulations such as the 52-hour workweek system, substitute holidays, and the enforcement of the Serious Accident Punishment Act, compounded by the spread of COVID-19. In his opening remarks, Lee said, "At least for next year, the minimum wage should be maintained at the current level," adding, "The outlook for small and medium-sized enterprises' business conditions rose from 65% in January to 83% in May but turned downward last month."

Ryu Kijeong, Executive Director of the Korea Employers Federation (KEF), reported that according to a survey by the Korea Federation of Micro Enterprise Associations, 85.5% of small business owners said it would take 'more than a year' for sales and business levels to recover to pre-COVID-19 levels. He also noted that the current minimum wage, including weekly holiday pay, is about 10,400 KRW per hour, placing it among the highest levels in advanced countries. Ryu pointed out, "At such a high level of minimum wage, the market's absorption capacity for increases is significantly reduced, and even a slight increase could have a huge negative impact on the market, such as employment reduction among vulnerable groups or closures of self-employed businesses."

On the other hand, worker representatives reiterated their existing argument that next year's minimum wage must be significantly increased to alleviate polarization and sustain the livelihoods of low-wage workers. Park Hee-eun, Vice Chairperson of the Korean Confederation of Trade Unions (KCTU), said, "According to a 2018 report submitted by the Korea Labor Institute to the Minimum Wage Commission, even if the minimum wage is increased by 10% considering the expanded wage base, only 2.2% real wage increase effect appears; a 15% increase results in only 4.5%, and a 20% increase yields just 7.1%. It has been confirmed that real wages have not risen under the Moon Jae-in administration," adding, "Ultimately, for the minimum wage increase effect to work properly, the decrease in real wages caused by the expansion of the wage base must be reflected."

Lee Dongho, Secretary General of the Federation of Korean Trade Unions (FKTU), said, "The focus of next year's minimum wage deliberations should not only be on stabilizing the livelihoods of low-wage workers but also on being a key means and policy to resolve social polarization and income inequality. The minimum wage increase should be actively considered in this regard." He added, "The United States, Japan, Germany, and New Zealand have dramatically raised their minimum wages, and Switzerland has introduced a nationwide minimum wage exceeding 27,000 KRW per hour, one of the highest in the world. Our country cannot fall behind in efforts to address income inequality."

The Minimum Wage Commission has tentatively planned to hold the 9th plenary meeting on the 12th of this month. According to current law, the deadline for announcing the minimum wage is the 5th of next month. This means that the minimum wage deliberations must be completed by mid-month at the latest. This is why there is growing speculation that the decision on next year's minimum wage will likely be made late on the night of the 12th or early morning of the 13th.

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