The minimum wage for next year has been finally set at 6,030 won (US$5.30), with both management and labor circles unsatisfied.
Though the hike is the highest in eight years, labor representatives argued that it was still insufficient to improve low-wage workers’ lives, while employers claimed it would worsen the difficulties of small and medium businesses.
Representatives from management, those from labor, and labor experts agreed to increase the minimum wage by 8.1 percent next year at the final talks of the Minimum Wage Council meeting that continued into the early morning of July 9 from the previous evening.
Labor representatives had walked out of negotiations on July 8 in protest of labor experts’ earlier suggestion of the minimum wage hike. At a previous round of talks, labor experts proposed that the rate for the minimum wage hike be between 6.5 and 9.7 percent, driving the workers’ representatives to boycott further negotiations.
The minimum wage guide came after a vote by the Minimum Wage Council. The Minimum Wage Act stipulates that at least one-third of representatives from labor unions and employers participate in a vote to decide the minimum wage. However, if one party refuses to attend the negotiations more than once, the vote can go ahead without the presence of the other party.
Out of 27 representatives, the remaining 18, including nine labor experts and seven employers, put the revised proposal to a vote in the morning of July 9 without the presence of labor representatives, where 15 voted in favor, one against, and two abstained.
The hourly wage of 6,030 won translates to 48,240 won (US$42.74) a day and 1.26 million won (US$1,115.74) a month for those who work eight hours a day. The pay hike is expected to affect an estimated 3.42 million low-income workers, according to the Minimum Wage Council.
The 8.1 percent hike, however, raised immediate protests from both labor and management representatives. “We feel betrayed and disappointed by the decision, as we expected double-digit growth in the minimum wage as proposed by finance minister Choi Kyung-hwan,” the Federation of Korean Trade Unions, the nation’s largest trade union, said in a press release.
On the contrary, the Korea Employers Federation expressed complaints over the “drastic increase” in the minimum wage. “We regret the decision to drastically raise the minimum wage, which crushes small and medium-sized employers’ efforts for survival amid worsening economic conditions,” the organization said, pointing out that the 8.1 percent increase was much higher than the inflation rate of 0.5 percent.
There is, however, still room for a change in the rate, as the Ministry of Employment and Labor offers a 20-day period for both labor and management to express their objections before making the agreed minimum wage rate public for next year on Aug. 5.