Next Year's Minimum Wage 9,160 Won... Increasing Burden on the 'Clock Zero' Economy

Resolution at the Full Meeting of the Minimum Wage Commission
Raised by 5.1% Above Inflation Rate Amid COVID-19 Crisis
"Exceeds Payment Capacity," Strong Regret Expressed by Business and Small Business Groups
Employers Likely to Raise Objections

Park Junsik, Chairman of the Minimum Wage Commission, is looking at the vote count after deciding on next year's minimum wage at the 9th plenary meeting late in the afternoon on the 12th. The Minimum Wage Commission decided the minimum wage for next year to be 9,160 won on that day. (Image source=Yonhap News)

[Sejong=Asia Economy Reporters Moon Chaeseok, Kim Jonghwa, Yoo Jehoon] Next year's minimum wage has been set at 9,160 won per hour, a 5.1% increase from this year. Although it did not surpass the 10,000 won pledge made by the Moon Jae-in administration, backlash is already emerging, especially from small business owners and self-employed individuals struggling due to the resurgence of COVID-19. The business community strongly criticized the Minimum Wage Commission members, saying the increase "clearly exceeds payment capacity," while the Korea Federation of Small and Medium Business expressed concerns that "rising costs will reduce jobs and increase business closures."

The Minimum Wage Commission held its 9th plenary meeting at the Government Complex Sejong on the 12th and decided on next year's minimum wage. The monthly wage, based on 209 hours, is 1,914,440 won (including weekly holiday allowance).

The meeting's outcome was reached late at night. Despite marathon discussions, the business and labor sectors could not narrow the minimum wage gap. By late afternoon, the gap had narrowed to 1,150 won, and after the public interest members applied the deliberation promotion range (9,030~9,300 won), a single proposal of 9,160 won was put to a vote and passed with 13 in favor and 10 abstentions. During this process, all four worker members from the Korean Confederation of Trade Unions (KCTU) and all nine employer members walked out.

Major economic organizations such as the Korea Employers Federation (KEF) and the Federation of Korean Industries (FKI) expressed strong regret over next year's minimum wage increase using terms like 'shock' and 'helplessness.' KEF stated in a press release, "Despite the desperate appeals of economic actors going through the hardest times due to the unexpected 4th wave of COVID-19, the 5.1% increase is regrettable."

Employer members plan to file objections. Ryu Kijeong, Executive Director of KEF and an employer member of the Minimum Wage Commission, said, "We will file an objection within the period before the Ministry of Employment and Labor's announcement on the 5th of next month so that the Minister of Employment and Labor can accept our reasoning."

As backlash grew mainly from the business community, the government appealed for acceptance. Prime Minister Kim Boo-kyum, presiding over the Cabinet meeting at the Government Complex Seoul on the 13th, said, "I think both labor and management will have regrets, but I earnestly ask that the Minimum Wage Commission's decision be accepted from a magnanimous perspective." Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki also stated on his social media that "We will closely monitor market conditions to ensure next year's minimum wage is settled on the ground and will strengthen support to alleviate the burden on business owners as much as possible."

The Minimum Wage Commission will submit next year's minimum wage proposal to the Ministry of Employment and Labor. The ministry will announce next year's minimum wage by the 5th of next month after objections and reexaminations. The wage will take effect from January 1 of next year.

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