"Minimum Wage Decision Structure Fails to Reflect Changing Times... Differential Application and Structural Reform Needed"

Participants are speaking at the Minimum Wage System Improvement Plan forum held on the 2nd.

[Asia Economy Reporter Choi Dae-yeol] There have been calls to reform the current minimum wage determination system, which is considered outdated, to better suit the times. Experts also pointed out that the government should take a leading role and actively intervene in the decision-making process, considering the minimum wage as a policy wage and applying it differently according to industry and company size.

At the “Diagnosis of the Minimum Wage System and Search for Rational Improvement Measures” forum held by the Korea Employers Federation on the 2nd, experts from various fields voiced similar opinions. They particularly emphasized the need to systematically differentiate and apply the minimum wage by industry and region, given the differences in productivity, work intensity, and payment capacity.

Professor Kim Kang-sik of Korea Aerospace University stated in his presentation, “Considering the high rate of minimum wage non-compliance in certain industries such as agriculture, forestry, and fisheries, the weak payment capacity of businesses with fewer than five employees, and the poverty rate among elderly workers, it is necessary to apply the minimum wage differently by industry, size, and age group.”

According to Professor Kim, last year’s minimum wage was 61.2% of the median wage, exceeding the payment capacity of businesses. The minimum wage non-compliance rate, which is the proportion of workers earning less than the legal minimum wage, was 15.3% of all workers, exceeding an appropriate level. He argued that since the gap in minimum wage non-compliance rates between industries exceeded 50 percentage points, differential application is appropriate. However, he emphasized that the need for differentiation by region or for younger workers is relatively low.

Lee Dong-geun, Vice Chairman of the Korea Employers Federation, said in his opening remarks, “It is time to rationally improve the minimum wage system, which has remained largely unchanged for over 30 years, to match the increased minimum wage level and the rapidly changing labor market environment.” He added, “Urgent improvements are needed for the uniform minimum wage determination structure, the narrow scope of inclusion that benefits even high-wage workers from minimum wage increases, and the decision-making structure that intensifies labor-management conflicts.”

Participants at the forum unanimously agreed that the minimum wage determination system, which often misses deadlines every year, also needs reform. Professor Kim Kang-sik said, “It is desirable for the government to take the lead in deciding the minimum wage, and the criteria for determination should use the average wage increase rate, but the increase rate should be limited to a level that does not negatively affect employment.” He also suggested that it would be appropriate to transfer the decision-making authority to the National Assembly or the government, or to remove public interest commissioners and instead have the government participate directly.

Professor Lee Jung-min of Seoul National University proposed a method where the government decides after collecting labor and management opinions through the Minimum Wage Commission, while Senior Research Fellow Lee Jang-won of the Korea Labor Institute suggested determining an appropriate increase range through deliberations centered on the government and experts.

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