KCCI: "No Factors for Minimum Wage Increase Next Year Considering Business Conditions"

Presentation of Adjustment Factor Diagnosis Report
"Initial Proposal to Be Presented Soon"

[Asia Economy Reporter Kiho Sung] Regarding next year's minimum wage, a comprehensive analysis of indicators such as 'corporate payment capacity' and the minimum wage determination criteria exemplified by law, including 'living expenses,' 'wages of similar workers,' 'labor productivity,' and 'income distribution,' has led to claims that it will be difficult to raise the minimum wage for 2023 compared to this year.

The Korea Employers Federation (KEF) announced this on the 22nd through a report titled 'Diagnosis of Adjustment Factors for the 2023 Minimum Wage Application through Analysis of Major Minimum Wage Determination Criteria.'

First, regarding payment capacity, KEF stated that since the minimum wage is "the legally mandated wage floor that all workplaces must comply with, and sector-specific application is no longer possible, next year's minimum wage should be determined based on sectors that cannot afford the current minimum wage level," emphasizing that "considering this, there are no factors supporting a minimum wage increase from the perspective of corporate payment capacity."

Regarding living expenses, KEF pointed out that "the minimum wage deliberation should consider the living expense level of the minimum wage policy target," and added, "Therefore, it is appropriate to consider the living expenses at about 60% of the median, which is the policy target for the minimum wage (or the living expenses of low-wage workers earning less than two-thirds of the median wage as defined by international organizations such as the OECD), rather than the overall average living expenses including those of high-income groups."

KEF also emphasized concerning wages of similar workers that "Korea's minimum wage has exceeded 60% of the median wage, which can be considered the upper limit of an appropriate minimum wage level," and regarding labor productivity, stated that "from 2017 to 2021, the minimum wage increased by 44.6%, whereas labor productivity per person increased by only 4.3% (hourly labor productivity increased by 11.5%) during the same period, indicating no factors supporting a minimum wage increase from the labor productivity perspective."

Regarding income distribution, KEF stressed that "in Korea, the minimum wage system is estimated not to have a significant impact on improving income distribution, and it is judged inappropriate to raise the minimum wage for the purpose of income distribution due to its negative ripple effects."

KEF Director Sangwoo Ha stated, "After comprehensively examining key indicators such as payment capacity, which is the most important factor in wage determination, and the four major criteria exemplified by law, we confirmed that it is difficult to raise next year's minimum wage," emphasizing that "this is believed to be due to the aftermath of COVID-19, the recent complex economic crisis, and the fact that the shock from the high-rate minimum wage increases in 2018-2019 in our labor market has not yet been resolved." He added, "The initial proposal for the 2023 minimum wage by the user representatives, consisting of nine members, will be finalized and presented soon."

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