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🇰🇷 South Korea /Economy & Trade

Minimum Wage Debate Heats Up: Management Proposes Freeze, Labor Demands Increase

From Hankyoreh · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

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  • Business groups proposed freezing the minimum wage at 13,200 won for 2025, the same as this year.
  • Labor groups are demanding a 16.3% increase to 12,000 won, citing rising living costs and economic disparities.
  • The Minimum Wage Commission began deliberations, but a significant gap between labor and management suggests a difficult negotiation process.

South Korean business organizations have put forth their initial proposal for the 2025 minimum wage, advocating for it to remain unchanged at 13,200 won per hour. This marks the sixth consecutive year that management has proposed a wage freeze, a move met with strong opposition from labor unions.

The minimum wage is essential for basic survival.

— Labor representativesArgument for increasing the minimum wage.

Management cites concerns over increased labor costs, particularly for small businesses and sectors like accommodation and food services, where the rate of non-compliance with the current minimum wage is already high. Ryu Ki-jeong, a representative from the Korea Employers Federation, argued that South Korea's minimum wage as a percentage of the median wage (62.2%) already exceeds the internationally recommended upper limit of 60%. He also pointed to the significant "sub-minimum wage rate" (companies paying below the minimum wage), which stands at 12.4% nationally and exceeds 30% in certain sectors.

In stark contrast, labor groups are demanding a substantial increase, proposing 12,000 won per hour, which represents a 16.3% rise from the current wage. They argue that the minimum wage is essential for basic survival, especially amid rising living costs due to inflation and high energy prices. Labor representatives emphasize that economic gains, such as the booming stock market, do not benefit low-wage workers, and freezing the minimum wage would undermine its purpose.

Freezing or cutting the minimum wage under the pretext of labor productivity goes against the spirit of the system.

— Lee Mi-seonCriticism of the management's proposal to freeze the minimum wage.

"Freezing or cutting the minimum wage under the pretext of labor productivity goes against the spirit of the system," stated Lee Mi-seon, a vice chairwoman of the Korean Confederation of Trade Unions. Labor argues that increased purchasing power among low-wage workers would stimulate domestic consumption, benefiting small business owners and self-employed individuals alike.

The minimum wage is the most practical measure to protect low-income and vulnerable groups, as well as local economies and the self-employed.

— Ryu Ki-seopArgument for the minimum wage's role in economic stability.

The Minimum Wage Commission commenced its deliberations on the 2025 wage on June 23rd. However, the considerable gap between the initial proposals from labor and management, 12,000 won versus 13,200 won, indicates a challenging negotiation ahead. The commission must submit its final decision to the Labor Minister by June 29th, with the final wage for 2025 to be officially announced by August 5th.

South Korea's minimum wage exceeds the internationally recommended upper limit of 60% of the median wage.

— Ryu Ki-jeongArgument presented by management regarding the minimum wage level.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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