'Yoon Pledge' to Separate Minimum Wage by Industry Fails... Industry Disappointment and Concerns Spread

Industry: "Burden on Vulnerable Employment Groups is Heavy"
SMEs: "Minimum Wage Should Be Classified by Industry"

Next year, the minimum wage will be applied as a single amount regardless of industry, causing growing disappointment within the sector. During the presidential election, President Yoon Seok-yeol pledged to implement industry-specific minimum wage differentiation, raising expectations about its feasibility. However, with this recent decision, industry-specific minimum wage application will not be implemented next year. Since current law allows for industry-specific minimum wage differentiation and there is strong demand from the industrial sector, the issue of industry-specific differentiation is expected to remain a contentious point in future minimum wage negotiations.

According to the Minimum Wage Commission on the 17th, at the 4th plenary meeting held the previous day at the Government Complex Sejong, the application of industry-specific minimum wage differentiation was discussed, and it was decided to apply a single rate again next year. Previously, President Yoon had promised during his candidacy to apply minimum wages differentiated by industry. Although current law permits industry-specific minimum wage application, in South Korea, such differentiation was only applied in the first year of the minimum wage system in 1988, and from the following year onward, the same rate has been applied across all industries.

This decision has spread concerns and disappointment throughout the industrial sector. Economic organizations have collectively expressed regret. Kim Yong-chun, Employment Policy Team Leader at the Federation of Korean Industries, stated, "Due to the recent rapid increase in the minimum wage, a significant number of small business owners and self-employed individuals are facing management limits," adding, "With the failure to implement minimum wage differentiation considering industry and regional characteristics, the burden on vulnerable employment groups will continue."

The industry's concern lies in the fact that there are significant differences in companies' payment capacity and productivity across industries, and many companies in sectors suffering from crises such as the global supply chain disruption following COVID-19 and rising raw material prices find it difficult to bear the current minimum wage level. This is why the small and medium-sized enterprise sector has consistently emphasized the urgent need for industry-specific minimum wage differentiation for sectors that have reached their limits. In fact, a survey conducted last month by the Korea Federation of SMEs on small and medium-sized enterprises employing workers at the minimum wage level found that 29.0% of SMEs are currently struggling to pay wages normally. Regarding minimum wage differentiation, more than half (53.7%) responded that it is necessary, and 66.5% of companies selected ‘by industry’ as the most reasonable differentiation criterion. This indicates that many companies strongly feel the need for industry-specific minimum wage application.

Although industry-specific differentiation was not implemented next year, the industrial sector agrees on the need to moderate the pace of minimum wage increases. This is because the minimum wage is already high compared to major countries, and factors such as inflation and economic instability are increasing. In the Korea Federation of SMEs survey, 6 out of 10 SMEs (59.5%) said that next year’s minimum wage should be frozen (53.2%) or lowered (6.3%). Lee Tae-hee, Director of the Smart Jobs Division at the Korea Federation of SMEs, emphasized, "It is necessary to moderate the pace of minimum wage increases and apply differentiation considering the payment capacity of small and micro enterprises, which are relatively slow to recover."

There is also a stance that industry-specific minimum wage differentiation is absolutely necessary and that related agendas should be discussed again. Ryu Ki-jung, Executive Director of the Korea Employers Federation, said, "Public interest commissioners proposed conducting research and investigations on whether to implement industry-specific differentiation and, if implemented, on specific methods, and to submit related content to the Ministry of Employment and Labor before next year’s deliberations," adding, "Based on this, we expect more active discussions to continue next year."

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