SEOUL, The government has retracted its plan to consider employers' ability to pay salaries in setting the minimum wage, officials said Wednesday.
The Ministry of Employment and Labor announced a final revision to the criteria and procedures of setting the rate after reviewing expert feedback on a draft plan announced last month. The first version had called for consideration of employment levels, economic growth rates and businesses' ability to pay wages.
"We have excluded a company's pay ability as a basis for setting the minimum pay rate while supplementing the criteria with the rate's possible impact on employment and economic conditions," Vice Labor Minister Lim Seo-jeong told a press conference.
Lim said that some labor experts pointed out that it is difficult to index such an ability. The labor community also objected to the proposal, saying it is tantamount to an employer shifting to employees the responsibility for financial difficulties resulting from the employer's incompetence.
Under the new plan, the Minimum Wage Committee -- a trilateral panel of business and labor representatives and outside experts -- will have two subcommittees tasked with setting the legal upper and lower thresholds and deciding on the actual rate, respectively.
The subcommittee on the actual rate will be composed of 21 members comprising seven people each from the labor community, employers and labor experts. Out of the seven experts, three are recommended by the government and the remaining four by parliament.
Under the plan, the labor community, business community and the government, separately, can recommend five representatives for the formation of the subcommittee on the legal upper and lower thresholds, with the labor and business communities to each choose three of the 15 recommended people to exclude in order to make the subcommittee run with nine members.
The National Assembly is expected to deliberate on a bill, passed last month by the government and based on Wednesday's plan, to amend a labor statute regarding the calculation of the minimum wage.
The minimum wage has increased by 30 percent since the Moon Jae-in government took office in 2017. The Moon government is seeking to raise the minimum wage to 10,000 won (US$8.90) by 2020, a key election pledge by the president. Yet the rapid increase has sparked a strong backlash from businesses, especially small and self-employed shop owners, who have complained of ballooning labor costs.
In 2017, the minimum wage spiked 15.6 percent on-year to 7,530 won per hour. It again soared 10.9 percent to 8,350 won at the beginning of this year.
Moon has indicated his willingness to slow down the pace of minimum wage hikes, given the growing concerns amid a slowing economy.
But his government has made it clear that it will not back away from its push for labor reform.
Source: Yonhap news Agency