South Korea to reform minimum wage system, explore 'minimum compensation' for platform workers

South Korea's Ministry of Employment and Labor has launched a comprehensive review of its minimum wage system, signaling a significant effort to modernize its application and decision-making processes. The ministry plans to refine the operational methods of the Minimum Wage Committee and rationalize the criteria used for setting the minimum wage.

A key focus of the reform initiative is the exploration of a 'minimum compensation system' for workers in non-traditional employment arrangements, such as those in the platform and special employment sectors. This move aligns with the government's pledge to address the growing gap in labor protections for workers outside the conventional framework of the Labor Standards Act.

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The minimum wage must be able to fulfill its role as an objective standard and a universal protective function for low-wage workers.

The current system, largely unchanged since the Minimum Wage Act was established in 1986, relies on a committee comprising labor, employer, and public interest representatives. However, recurring disputes between labor and management, and the subsequent role of public interest committee members in breaking deadlocks, have highlighted the need for a more efficient and objective process. The ministry aims to learn from international practices and thoroughly examine the current criteria and committee operations to ensure the minimum wage functions effectively as a social safety net.

Furthermore, the ministry acknowledges the emergence of 'blind spots' in worker protection due to shifts in the labor market structure. The failure to apply minimum wage standards to 'contract workers' in the platform and special employment sectors during the recent Minimum Wage Committee session underscores the urgency of establishing a robust protection system. The committee's recommendation to form a dedicated task force within the ministry to devise comprehensive improvement plans further emphasizes the commitment to addressing these evolving labor realities.

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Protection for workers in new employment types is lacking due to changes in the labor market structure.