"Discussion Needed on Introducing Sector-Specific Application of Minimum Wage"

Income-Led Growth Special Committee and Tripartite Commission Minimum Wage Policy Forum on the 18th
Seungryeol Lee, Senior Research Fellow at Korea Labor Institute, Suggestions

Sung-hyun Moon, Chairman of Tripartite Commission, "Regret over the 'War of Eul (乙)' Evaluation"
"Discussion Should Focus on Strengthening Payment Capacity of SMEs and Small Business Owners"

Moon Sung-hyun, Chairman of the Economic, Social and Labor Council (left), and Park Joon-sik, Chairman of the Minimum Wage Commission, attending the National Assembly audit on the Economic, Social and Labor Council, Central Labor Commission, and Minimum Wage Commission held by the Environment and Labor Committee on the 12th of last month. Photo by Yoon Dong-joo doso7@

[Sejong=Asia Economy Reporter Moon Chaeseok] It was suggested at a policy forum held by a presidential advisory committee that the Minimum Wage Commission should start discussions on introducing differentiated minimum wages by industry. There was also an opinion that in-depth discussions on platform workers and related issues are necessary. The focus of the discussions should be on strengthening the payment capacity of small and medium-sized enterprises (SMEs) and small business owners.

Seungryeol Lee, Senior Fellow at the Korea Labor Institute, made this suggestion on the morning of the 18th at the Bankers Hall in Myeongdong, Seoul, during the 'Evaluation and Tasks of Minimum Wage Policy' forum jointly hosted by the Presidential Committee on Income-Led Growth and the Economic, Social and Labor Council. Lee explained that the three main functions of the Minimum Wage Commission are deliberation and reconsideration of the minimum wage, deliberation on the classification of business types for minimum wage application, and research and recommendations for the development of the minimum wage system. He added, "Although the Minimum Wage Commission currently has a strong character as a bargaining body, it is necessary to strengthen its function as a deliberative body going forward." He continued, "It is necessary to consider introducing differentiated minimum wages by industry and to conduct additional discussions on platform labor and subcontracting systems. To strengthen the research function, the commission should be activated on a regular basis."

Sung-hyun Moon, Chairman of the Economic, Social and Labor Council, emphasized that future discussions surrounding the minimum wage should focus on ways to increase the payment capacity of SMEs and small business owners. Since the Moon Jae-in administration, the hourly wage has surged from the 6,000 won range to the 9,000 won range, causing considerable social conflict, but such discussions should no longer be seen as a "war among the underdogs." He said, "The government has been striving to resolve wage disparity issues in our society through minimum wage increases, but it is regrettable that discussions related to the minimum wage are perceived as a 'war among the underdogs.' Going forward, discussions on the minimum wage should focus on ways to enhance the payment capacity of SMEs and small business owners."

According to the Income-Led Growth Special Committee, the proportion of low-wage workers decreased by 7.5 percentage points from 23.5% in 2016 to 16% in 2020. During the same period, the hourly wage of non-regular workers in SMEs compared to regular workers in large corporations increased by 7.1 percentage points from 37.4% to 44.5%, and the wage gap between the bottom 10% and top 10% narrowed by 8.0 percentage points from 4.5 times in 2015 to 3.6 times in 2019. Although there are many controversies such as management difficulties and weakened investment sentiment among business owners and managers, the Income-Led Growth Special Committee claims that there have been some positive effects in terms of alleviating polarization. Yuseon Kim, a member of the Income-Led Growth Special Committee, stated, "The Moon Jae-in administration has made efforts to resolve labor market polarization such as wage gaps through income-led growth policies and to lay the foundation for inclusive growth by strengthening social safety nets and welfare for the economically vulnerable. In particular, the minimum wage policy has played a significant role in protecting low-wage workers and reducing wage inequality."

There was also an argument that the increase in the minimum wage did not necessarily have a negative impact on the quantity and quality of jobs. Yonggi Kim, Vice Chairman of the Jobs Committee, said, "A proper evaluation is needed on what effects the increase in the minimum wage has had on the quantity and quality of jobs. To create good jobs, it is necessary to harmonize related job policies in industry, innovation, and regions with the minimum wage increase policy."

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