South Korea’s minimum wage policy faces overhaul
To help small businesses still affected by the economic fallout of the prolonged pandemic, Yoon has proposed revising the policy in a more realistic manner by adopting a differential system based on regions and industries.
“There should be discussion over the introduction of a forward-looking minimum wage system by differentiating wage policies for each region and type of business,” Yoon had said while running for the presidency.
The Minimum Wage Commission, a sub-organisation under the Ministry of Employment and Labour, has started an internal discussion on the minimum wage policy for next year.
The commission will have to submit its decision to the labour minister by June 29. But due to the contentiousness of the issue, the process is expected to take more time for the commission to make the final proposal.
Prime Minister nominee Han Duck-soo has also expressed his negative viewpoint on Moon’s minimum wage policy, saying, “When the minimum wage rises steeply, companies will reduce employment, which will result in a lose-lose game for both sides. The minimum wage should be decided by negotiations between labour and management, and the government needs to minimise its intervention.”
The Moon administration had advocated the raising of the minimum wage as part of its income-led growth strategy. In 2017, the first year of the Moon administration, the minimum wage was 6,470 won (US$5.31), rising by 41% to 9,160 won (US$7.5) in 2022, according to The Korea Times.