South Korea to raise minimum wage 3.7% next year to 10,700 won per hour

South Korea's Minimum Wage Commission has decided to raise the minimum wage for 2027 to 10,700 won per hour, representing a 3.7% increase from the current year's rate. This decision, reached after commissioners failed to achieve a consensus and voted, signifies a notable adjustment in the country's labor compensation standards.

The new hourly wage translates to approximately 2,236,300 won per month for a standard 40-hour workweek. This year's increase surpasses the Bank of Korea's consumer price inflation forecast of 2.7% and is higher than the minimum wage adjustments seen over the past three years, which ranged between 1.5% and 3%. The commission's proposal will be submitted to the minister of employment and labor for official announcement by August 5, with the new wage taking effect on January 1, 2027.

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The issue of applying a minimum wage to contract work was discussed, but no agreement was reached.

The deliberation process for this year's minimum wage extended beyond the statutory deadline of June 29, indicating the complexity of reaching an agreement. In addition to setting the wage, the public interest commissioners put forth a recommendation for the government to establish a task force. This task force would be charged with comprehensively researching and developing a reform package concerning the extension of minimum wage protections to gig workers on digital platforms and individuals in special employment arrangements.

While the discussion included the application of minimum wage to contract work, no agreement was reached on this specific issue. The recommendation emphasizes the need for a thorough examination of the scope of workers to be covered and the criteria for extending such protections, signaling a potential future expansion of minimum wage coverage in South Korea.

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The Ministry of Employment and Labor should establish a task force to comprehensively research issues including the scope of workers to be covered by minimum wage and the standards for extending coverage and then develop a sweeping reform package.