KCCI Requests Ministry of Employment to Reconsider Next Year's Minimum Wage

"Growing Difficulties for Small and Micro Enterprises and Small Business Owners"
"Negative Impact on Employment of Vulnerable Workers"

[Asia Economy Reporter Kiho Sung] The Korea Employers Federation (KEF) announced on the 10th that it submitted an "Objection to the 2023 Minimum Wage Proposal" to the Ministry of Employment and Labor on the 8th. KEF stated that the minimum wage proposal for next year (9,620 KRW per hour), decided on June 29, would increase the management burden on our small and micro enterprises and small business owners who are struggling to endure the triple hardships of recent high inflation, high interest rates, and high exchange rates amid the aftermath of COVID-19, and furthermore, could potentially cause employment instability among vulnerable workers, which is why they submitted the objection.

The main grounds for KEF's objection to the "2023 Minimum Wage Proposal" are fourfold: ▲the difficulties faced by small and micro enterprises and small business owners, who are the main payers of the minimum wage, were not sufficiently considered; ▲given the very high current minimum wage level and the four minimum wage determination criteria exemplified in the law, a 5% increase is excessively high; ▲the minimum wage was not applied differently according to the type of business; and ▲the basis for calculating the 5.0% increase in the 2023 minimum wage is inappropriate.

First, regarding the insufficient consideration of the difficulties faced by small and micro enterprises and small business owners, KEF expressed concern that if the minimum wage for next year is fixed at 9,620 KRW per hour, the minimum wage including weekly holiday pay would exceed 11,500 KRW per hour (for workers working more than 15 hours per week), making it difficult for the majority of small and micro enterprises and small business owners to bear the cost.

Regarding the "excessiveness of the 5% increase given the very high current minimum wage level and the determination criteria exemplified in the law," KEF stated that considering Korea's current minimum wage level and the four determination criteria exemplified in the Minimum Wage Act (wages of similar workers, cost of living, labor productivity, and income distribution), a 5% increase in the minimum wage is excessively high.

Regarding the failure to apply the minimum wage differently by type of business, KEF pointed out that the minimum wage has been rising too quickly and applied uniformly without considering the market's capacity to absorb it, resulting in some industries facing a reality where they cannot afford the current minimum wage. KEF also criticized the Minimum Wage Commission's decision to maintain a single minimum wage system this year as problematic.

Regarding the problems with the basis for calculating next year's minimum wage increase rate, KEF emphasized that the basis for the 5.0% increase rate announced by the Minimum Wage Commission is inappropriate.

Hahm Sang-woo, Head of KEF's Economic Research Department, said, "Considering various factors including the recent economic situation, this minimum wage increase was a reckless decision that did not sufficiently consider the survival of small and micro enterprises and small business owners, who are the main payers and directly affected parties of the minimum wage, as well as the job situation of vulnerable groups." He added, "We hope the government will not ignore the urgent appeals from the field and will seriously consider whether to reexamine the decision."

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