Seoul: Negotiations between business and labor over next year's minimum wage formally began Tuesday at the Minimum Wage Commission. Labor representatives have proposed a significant increase in the hourly minimum wage by 16.3 percent, raising it from 10,320 won to 12,000 won. This proposed hike translates to a monthly wage of 2.508 million won, based on a standard 209-hour work month. Labor groups argue that the current minimum wage falls short of meeting basic public expectations, noting it is less than the cost of a single lunch.
According to Yonhap News Agency, Korea's recent history under the Moon Jae-in administration serves as a cautionary tale. Rapid increases in the minimum wage during that period placed substantial pressure on small businesses, highlighting the need for both parties to pursue a balanced compromise rather than another sharp increase. A survey released by the Korea Enterprises Federation underscores the challenges faced by self-employed business owners, with 57 percent of 500 respondents nationwide reporting worsening business conditions compared to last year. The largest share, 44.6 percent, favored freezing the minimum wage, while nearly 60 percent acknowledged a lack of capacity to hire additional workers. Additionally, 34 percent reported earning less each month than the current minimum monthly wage of 2.156 million won.
The current minimum wage system appears inadequate, as evidenced by 2.769 million workers, or 12.4 percent of all wage earners, receiving less than the legal minimum wage last year. The accommodation and food service sector is under particular strain, with 31.6 percent of workers earning below the minimum wage. Employer groups have proposed differentiated minimum wages for sectors such as Korean restaurants, foreign restaurants, and snack bars like gimbap shops, arguing that these small businesses cannot sustain rising labor costs. However, this proposal was rejected at last week's Minimum Wage Commission meeting.
It is regrettable that the concerns of struggling small business owners continue to be dismissed. Many members of the Organisation for Economic Cooperation and Development, including the United States, Japan, and France, implement differentiated wage floors based on region, industry, age, or skill level, rather than a single nationwide minimum wage. Korea should heed the lessons from the Moon administration's experience, where steep minimum wage increases exacerbated tensions between vulnerable workers and financially strained small business owners. In light of current economic conditions, a cautious approach to next year's minimum wage increase is deemed the most prudent course.