Minimum wage for gig workers rejected again in South Korea

The South Korean Minimum Wage Committee has decided against applying the minimum wage to contract-based workers, a category that includes delivery riders and tutors, sparking criticism from labor groups.

The committee's fifth plenary session on Tuesday voted down the proposal to set a separate minimum wage for these workers. Out of 27 committee members (9 from labor, 9 from management, and 9 public interest representatives), 15 voted against the proposal, with 11 in favor and one abstention. The committee concluded that there would be no separate minimum wage application for contract-based workers in the minimum wage set for 2027.

Contract-based employment, where compensation is based on work output or quantity, legally excludes approximately 8.7 million special employment, platform, and freelance workers who are classified as business operators rather than employees. Labor organizations strongly condemned the decision. The Korean Confederation of Trade Unions (KCTU) issued a statement expressing deep regret, calling it a decision that "turns its back on the original intent of the minimum wage system to protect low-wage vulnerable workers." The KCTU added that it was a "disappointing decision that abandons the committee's duty to alleviate labor market polarization and expand the social safety net."

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We express deep regret over the decision that turns its back on the original intent of the minimum wage system to protect low-wage vulnerable workers.

The issue gained prominence this year when Labor Minister Kim Young-joo requested the committee to review the possibility of setting a separate minimum wage for contract workers, marking its first official consideration in 38 years. However, sharp disagreements between labor and management representatives persisted throughout the discussions. Labor cited examples of delivery riders and app taxi drivers in cities like New York and Seattle, arguing for minimum wage application. Management, conversely, maintained that contract workers are not legally considered employees under the Labor Standards Act, making minimum wage application difficult.

The committee is scheduled to discuss the application of industry-specific minimum wages, a proposal favored by management, on June 16. The initial wage demands for next year from both labor and management are expected in mid-June, with labor pushing for a significant increase and management advocating for a freeze. The current minimum wage stands at 10,320 won per hour.

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This year was the right time to decide on minimum wages for contract workers, but the committee and the government lacked the will.