Will Next Year's Minimum Wage Exceed 10,000 Won? Labor Groups Argue "11,860 Won is Appropriate"

Claims for Next Year's Minimum Wage Reflecting Adequate Living Expenses at 11,860 Won
29.5% Higher Than This Year's Minimum Wage (9,160 Won)

Park Junsik, Chairman of the Minimum Wage Commission, is delivering an opening remark at the Minimum Wage Commission meeting held on the 5th at the Press Center in Jung-gu, Seoul. Photo by Kang Jinhyung aymsdream@

[Asia Economy Intern Reporter Kim Gunchan] There is a claim that next year's minimum wage should be an hourly wage of 11,860 won, reflecting an appropriate living cost.

Lee Jeong-ah, Associate Research Fellow at the Korea Employment Information Service, made this claim at the "Re-examining Living Costs as a Core Criterion for Minimum Wage Determination" forum held at the National Assembly Members' Office Building on the 24th.

Using data from the 2021 Household Trends Survey by Statistics Korea, Associate Research Fellow Lee calculated the appropriate living cost by dividing the average household income sources by the number of income earners to estimate the hourly minimum wage.

The appropriate living cost refers to "the expenditure necessary to maintain a standard living level in Korean society."

The scale of appropriate living costs presented by Associate Research Fellow Lee is as follows: △1-person household 2,354,000 won △2-person household 3,716,000 won △3-person household 5,278,000 won △4-person household 6,336,000 won. These figures were calculated considering the average ratio of earned income to current income in wage worker households and the inflation rate.

Based on this, the estimated minimum wage for 2023 is 11,860 won per hour. This meets 83.7% of the appropriate living cost and is 29.5% higher than this year's minimum wage (9,160 won).

The monthly appropriate living cost is also 2,479,000 won, which is 29.5% higher than the monthly salary based on this year's minimum wage (1,914,000 won).

The Federation of Korean Trade Unions and the Korean Confederation of Trade Unions stated at the forum that "using macroeconomic indicators such as economic growth rate and inflation rate as the main criteria for minimum wage determination does not align with the system's purpose of stabilizing the livelihoods of low-wage workers."

The current legal criteria for minimum wage determination include △workers' living costs △income distribution ratio △wages of similar workers △labor productivity.

However, macroeconomic indicators have often been reflected instead of legal criteria. The formula for this year's minimum wage is a representative example. The 5.1% increase in the 2022 minimum wage was calculated as 'economic growth rate (4.0%) + consumer price inflation rate (1.8%) - employment increase rate (0.7%).'

Lee Chang-geun, a presenter at the forum and researcher at the Korean Confederation of Trade Unions' Democratic Labor Research Institute, said, "It is problematic to decide the minimum wage based on a few macroeconomic indicators because measuring household living costs is difficult. We need to measure living costs considering various household types and income earners and reflect them in minimum wage decisions."

However, there are criticisms that the 29.5% increase to 11,860 won for next year's minimum wage lacks realism. From 2020 to this year, the annual minimum wage increase rate ranged from 1.5% to 5.0%.

Also, due to differing positions with the business sector, difficulties are expected during the minimum wage deliberation process. According to surveys by the Korea Employers Federation and the Korea Federation of Small and Medium Business, among 600 small and medium enterprises employing minimum wage workers, 59.5% responded that next year's minimum wage should be frozen (53.2%) or reduced (6.3%). Opinions for increases were within 2-3% (18.7%), around 1% (13.0%), and within 4-5% (7.3%), respectively.

Meanwhile, the Minimum Wage Commission plans to hold its third plenary meeting on the 9th of next month to discuss the level of next year's minimum wage.

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