South Korea deliberates on next year’s minimum wage

The business sector has argued for next year’s minimum wage to be maintained at 9,160 won (US$7.14) per hour, which is the same as this year’s level, because it has been raised so much that most SMEs cannot bear the burden anymore.

On the other hand, the two major trade unions are asserting that low-income workers are experiencing hardships because of the highest inflation in 14 years, proposing to raise the minimum wage by 30% to 11,860 won (US$9.25).

This huge difference between the proposed levels of the two sides of 2,700 won (US$2.1) is expected to make this year’s deliberations more heated than ever before.

The rate of increase in the minimum wage in Korea has been unprecedented over the past few years. The cumulative increase rate of the minimum wage for the past five years was 44.6%, which is four times higher than the average increase rate of the five developed countries including the US, the UK, Germany, France, and Japan.

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In March of this year, the proportion of the self-employed among the total employed fell below 20% for the first time since statistics were compiled. This is because many of the self-employed, bearing the brunt of the increased minimum wage, shut down their businesses permanently during the COVID-19 pandemic, according to The Dong-A Ilbo.