KCCI: "Minimum Wage Must Be Implemented with Industry-Specific Differentiation"

Issue Review Report Presentation
"Emphasis on Reconfirming Necessity"

[Asia Economy Reporter Kiho Sung] The business community has emphasized that "sector-specific application must be implemented" in relation to the decision on next year's minimum wage.

On the 13th, the Korea Employers Federation (KEF) released a report titled "Review of Issues Regarding Sector-Specific Application of the Minimum Wage," stating, "Through reviewing the issues related to sector-specific application of the minimum wage, we have dispelled unnecessary misunderstandings and reaffirmed the necessity of sector-specific application," emphasizing this point.

KEF first addressed the claim that "sector-specific application is unnecessary and will only cause labor market confusion," presenting as grounds for the necessity of sector-specific application that Korea’s minimum wage has been raised too quickly and uniformly without considering the market’s capacity to absorb it, leading some sectors to face situations where they cannot cope with the increase.

In particular, KEF stressed, "Despite significant differences in companies' payment capacity and productivity across sectors, the minimum wage is applied uniformly, resulting in a severe gap in the rate of wages below the minimum wage between sectors," and added, "To resolve this issue, sector-specific application is absolutely necessary."

Regarding the argument that sector-specific application would cause new stigmatization effects, KEF stated, "Concerning the stigmatization effect claimed by labor groups, the possibility that sector-specific application of the minimum wage would newly cause stigmatization effects that did not previously exist is low. Especially considering that advanced countries implement sector-specific application in various ways such as by age, sector, and region, concerns about stigmatization are excessive," and predicted, "Rather, sector-specific application can restore wages in the relevant sectors to a certain extent to market equilibrium levels, thereby playing a role in expanding employment and increasing the choices available to workers and companies."

In response to opinions that "sector-specific application is inconsistent with the purpose of the minimum wage system and violates the constitution," KEF said, "The claim that sector-specific application does not guarantee workers' livelihoods and thus contradicts the purpose of the minimum wage system is excessive," emphasizing, "Major advanced countries already apply the minimum wage sector-specifically based on various criteria while preserving the purpose of the minimum wage system." They also pointed out, "The Constitutional Court has recognized the necessity of sector-specific application of the minimum wage in its rulings."

Regarding the claim that "sector-specific application is a provision that has become obsolete as it has not been implemented for over 30 years," KEF argued, "Sector-specific application is a key deliberation item that the Minimum Wage Commission has judged annually whether to implement according to the Minimum Wage Act," and added, "The necessity of sector-specific application was recognized from the time the Minimum Wage Act was enacted, but the need has greatly increased recently due to rapid minimum wage hikes."

Regarding the argument that "it is impossible to implement now because a rational standard cannot be established," KEF stated, "It is entirely possible to first apply it to some sectors that absolutely cannot afford the current minimum wage," and pointed out, "To prepare more detailed criteria for sector-specific application, precise statistics are essential, so the government and the Minimum Wage Commission need to faithfully build related research and statistical foundations."

In response to the criticism that "the minimum wage under-rate announced by KEF is a public opinion distortion using statistical errors," KEF emphasized, "The minimum wage under-rate statistics announced by KEF (April 18) are the same official statistics used by the Minimum Wage Commission for deliberations," and added, "Comparing the under-rate statistics of the same survey with the past clearly shows a significant increase in the under-rate and the gap between sectors."

Regarding the claim that "sector-specific application was discussed by the Minimum Wage Commission's minimum wage system improvement TF in 2017 and concluded to be difficult, so there is no need for further discussion," KEF argued, "The 2017 minimum wage system improvement TF did not have sufficient discussion, and the business community did not agree with its results," and added, "The situation regarding the minimum wage now is completely different from that in 2017 and should be taken into account."

Ryu Kijeong, Executive Director of KEF, said, "Due to rapid minimum wage increases and uniform application, our minimum wage level has already reached the highest level compared to competing countries, and in the process, some sectors have appeared that absolutely cannot afford this minimum wage," and emphasized, "Considering comprehensively the fact that the degree of damage caused by COVID-19 varies by sector, sector-specific application is no longer a choice but a necessity."

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