Tonight~Tomorrow Dawn, Next Year's Minimum Wage to Be Decided... Maintaining the 8,000-Won Range vs Securing 9,270 Won or More

Labor 10,440 won vs Management 8,740 won
Public Interest Committee Decisively Sets 'Deliberation Promotion Range'
1,700 won Gap Attempts to Reduce Below 1,000 Won
Adjusting 350 Won Each to 9,090~10,090 Won Range
If Set at 9,000 Won, Both Sides Dissatisfied... Especially Critical for Management

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Moon Chaeseok] It is expected that the deliberation results for next year’s minimum wage will be announced tonight or early tomorrow morning. The business sector aims to keep the minimum wage in the 8,000 won range by limiting the increase rate to within 3%, even if freezing it is difficult, while the labor sector is determined to secure at least a 6.3% increase (9,270 won), which surpasses the average wage increase rate of the previous administration.

The Minimum Wage Commission, which deliberates and decides on the minimum wage, plans to hold its 9th plenary meeting on the afternoon of the 12th at the Government Sejong Complex to continue deliberations on next year’s minimum wage. It is widely expected that the commission may decide on next year’s minimum wage that night, and if no conclusion is reached, a 10th plenary meeting will likely be held early the next day to make a decision. Since the final deadline for announcing the minimum wage under the Minimum Wage Act is August 5, and considering the objection procedures, the commission must decide on the minimum wage by mid-July at the latest.

At the 8th plenary meeting on the 8th, both sides submitted their first revised proposals for next year’s minimum wage. The gap between the labor sector’s proposal of 10,440 won per hour (a 19.7% increase) and the business sector’s 8,740 won (a 0.2% increase) was 1,700 won, showing little change from the initial gap of 2,080 won. Both labor and management are expected to submit second revised proposals upon Chairman Park Junsik’s request, but many predict it will still be difficult to find common ground.

In this case, Chairman Park and the public interest commissioners may request a third revised proposal and present a “deliberation promotion range.” When the gap between labor and management does not narrow, public interest commissioners can suggest a range within which revised proposals should be submitted. Assuming the 1,700 won gap is reduced to 1,000 won, the range would be between 9,090 won and 10,090 won, adjusted by 350 won from the first revised proposals. Attention is focused on what basis and how the public interest commissioners will apply factors such as the business sector’s concerns about small business owners’ ability to pay wages, the impact of the fourth wave of the COVID-19 pandemic, the labor sector’s references to wage increase trends in major countries like the United States, and the fact that the past two years have seen historically low increase rates (2.9%, 1.5%).

Looking beyond the data, many argue that the public interest commissioners are unlikely to propose a freeze and that the key point will be how much to adjust the increase rate. Eight of the nine public interest commissioners were reappointed earlier this year, and it is widely believed that they would find it burdensome to approve another historically low increase rate as in previous years. The fact that the Moon Jae-in administration, which advocated for a “labor-respecting society,” would need to justify an increase higher than the Park Geun-hye administration’s average increase rate of 7.4% means that next year’s minimum wage must be raised by at least 6.3% (9,270 won), which could also be a burden. The Federation of Korean Trade Unions pressured Prime Minister Kim Boo-kyum on the 21st of last month, demanding “at least a 6.3% increase.”

If some labor or management members walk out in protest of the deliberation promotion range proposed by the public interest commissioners during the plenary meeting, making normal deliberations difficult, it is highly likely that the public interest commissioners will propose next year’s minimum wage and put it to a vote. If an agreement is reached around the 9,000 won level (a 3.2% to 14.6% increase), both labor and management may express dissatisfaction. In particular, the business sector could face criticism for allowing the minimum wage to rise above 9,000 won with an increase of more than 3% during the COVID-19 pandemic, when even freezing the wage would have been preferable. Meanwhile, the labor sector could claim that achieving a 6.3% increase fulfills their primary objective.

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