There is a growing possibility that the decision on next year's minimum wage in South Korea will once again miss the deadline of June 29th. Despite holding seven meetings, the Minimum Wage Commission has been unable to finalize the initial proposal due to conflicts arising from the demands of worker representatives and discussions on differentiated application by industry.
According to labor and management representatives on the 25th, the Minimum Wage Commission is scheduled to hold its 8th plenary session on the 27th.
The Minimum Wage Commission initiated discussions on next year's minimum wage during its first plenary session on May 2nd. However, this year's deliberations were plagued with conflicts from the early stages when worker representatives demanded the resignation of Commissioner Kwon Soon-won and faced further disruptions when Kim Jun-young, a worker representative and the head of the Korean Confederation of Trade Unions Metalworkers' Union, was detained. The conflict escalated when the Ministry of Employment and Labor requested the dismissal of Commissioner Kim, stating that he had "damaged the dignity." This is the first time the Ministry has made such a request to a minimum wage commissioner since the introduction of the minimum wage.
Discussions on differentiated application of minimum wage by industry began during the 4th plenary session, but both sides failed to narrow their differences, leading to intense debates. It was not until the 7th meeting that a vote was finally taken, with 11 in favor and 15 against, resulting in the decision not to implement differentiated application by industry next year.
The employer representatives expressed disappointment and powerlessness over the decision to once again apply a single minimum wage without differentiating by industry. They strongly urged the government and the Minimum Wage Commission to quickly establish a more scientific and statistical basis for differentiated application as required by the law.
The user representatives did not present an initial proposal during the 7th meeting. The initial proposal is expected to be presented in the 8th meeting on the 27th.
Even if the initial proposal, demanded by labor and management, is completed, reaching a conclusion on the deliberation is expected to be difficult. The labor side has demanded a minimum wage of 12,210 won per hour, a 26.9% increase compared to this year. The management side is likely to argue for a freeze. The difference between the minimum wage advocated by both sides amounts to approximately 2,600 won per hour.
Ryu Ki-jeong, the executive director of the Federation of Korean Industries, criticized the labor side's demands, stating that "raising the minimum wage without considering the desperate reality of small and medium-sized enterprises and self-employed individuals is equivalent to telling them to shut down." He further criticized that considering the minimum wage of 9,620 won per hour this year, along with holiday pay and social insurance, businesses that employ minimum wage workers would bear labor costs amounting to 140% of the minimum wage.
On the other hand, the labor side argued that "the fundamental purpose of the minimum wage system, the distribution of household members of minimum wage workers, and recommendations from international organizations should be taken into account, making the cost of living for households the core of minimum wage determination." The appropriate cost of living for next year is 14,465 won per hour, and applying the average labor income ratio of 84.4% to the gross income of workers' households results in 12,210 won.
As the conflict between the two sides intensifies, the possibility of the minimum wage not being decided within the legal review deadline has increased. The deadline for the legal review of the minimum wage has often been missed in the past. In the case of last year, the agreement was reached on June 30th, just one day past the deadline, but from 2015 to 2021, the review was completed in mid-July. The deadline for announcing the minimum wage is August 5th each year, and considering the objection process, the review should be completed by mid-July.