"Less Than 5-Person Workplaces: One in Three Employees Earn Below Minimum Wage"

Kyunghyong Analyzes Minimum Wage Underpayment Rate Last Year
3.215 Million People... Second Highest Ever
Underpayment Rate Also 15.3%, Fourth Highest

On the 5th, union members affiliated with the Korean Confederation of Trade Unions held a press conference in front of the Press Center in Jung-gu, Seoul, declaring their struggle for the 2023 minimum wage increase. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Choi Dae-yeol] Last year, 3.215 million wage workers in South Korea earned less than the minimum wage, marking the second highest number on record.

According to a report by the Korea Employers Federation analyzing the raw data from Statistics Korea's Economically Active Population Survey (August 2021), the minimum wage underpayment rate last year was 15.3%. The minimum wage underpayment rate refers to the proportion of workers who earn less than the legally mandated minimum wage. The minimum wage last year was 8,720 KRW per hour, and the total number of wage workers was 20.992 million.

The number of workers earning below the minimum wage was the second highest ever, and the underpayment rate was the fourth highest. The Korea Employers Federation stated, "Despite the minimum wage increase rate last year being the lowest in the past 20 years at 1.5%, this is the second highest figure since the underpayment rate statistics began in 2001," adding, "The main reason is presumed to be the cumulative effect of high minimum wage increases, which have raised the minimum wage level significantly, thereby reducing labor market acceptance."

Number of Workers Earning Below Minimum Wage and Rate of Workers Earning Below Minimum Wage Since 2001

According to an analysis comparing the OECD and major countries, South Korea's minimum wage last year was 61.2% of the median wage, ranking eighth highest among OECD countries. The median wage refers to the wage of the worker positioned in the middle when all wage workers are lined up. The Korea Employers Federation emphasized that compared to the G7 countries, which are direct competitors, South Korea's minimum wage is the highest.

From 2017 to last year, the cumulative minimum wage increase rate was about 44%. Among the other G7 countries, Canada, which has a relatively high rate, was at 26.5%, and the UK was at 23.1%, both significantly lower than South Korea.

By industry, the minimum wage underpayment rate in the agriculture, forestry, and fisheries sector exceeded half at 54.8%. The accommodation and food service industry also reached 40.2%. The information and communication sector had a low rate of 1.9%. The new government is likely to discuss applying differentiated minimum wages by region and industry.

Smaller workplaces had a higher proportion of workers earning less than the minimum wage. In workplaces with fewer than five employees, 1.277 million out of 3.795 million workers, or 33.6%, earned less than the minimum wage. Ha Sang-woo, head of the Economic Research Division at the Korea Employers Federation, said, "The cumulative excessive minimum wage increases show that our labor market, especially in certain industries and sizes, cannot sustain the minimum wage," adding, "It is important to stabilize the minimum wage for a considerable period going forward, and there is a need to apply differentiated minimum wages considering the significant disparities in business environments by industry."

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