The minimum wage for next year has been set at 10,700 won per hour, a 3.7% increase from this year. Labor representatives argue that considering rising prices and the cost of living, this effectively amounts to a freeze, while business groups contend it will impose further burdens on small business owners and self-employed individuals already at their limits. Ultimately, no agreement was reached between labor and management, and after a vote, the employer's proposal was adopted.
More attention should be paid to the structural limitations of the minimum wage system, which repeats itself annually. This year, labor and management started from vastly different positions, with labor demanding 12,000 won and management advocating for a freeze. Although the gap narrowed through several revisions, they failed to reach an agreement by the end. The Minimum Wage Commission ultimately resorted to the familiar conclusion of a vote.
The minimum wage is a crucial policy variable that affects workers' livelihoods, business costs, and the overall economy. Yet, the current decision-making process remains largely trapped in a cycle of labor-management struggles and political conflicts. After decisions are made, labor often expresses dissatisfaction, while management claims the wage is excessive, creating a pattern where no one is satisfied. This unsatisfactory decision-making structure has persisted for decades.
The difficulty of this decision is compounded by the challenging economic realities faced by both sides. Workers are feeling the impact of rising prices, which diminish their real purchasing power. There is a valid argument that the minimum wage should ensure a basic standard of living. Conversely, small business owners and self-employed individuals are grappling with economic downturns, weak consumer demand, and rising rents and raw material costs. Concerns that increased labor costs could lead to business closures and job cuts cannot be dismissed lightly.
Particularly in sectors like hospitality and food service, some businesses struggle to bear the same wage burdens as large corporations or high-profit industries. While the intent of the minimum wage is to provide basic protection for similar work, the growing disparities in profit structures and productivity across industries cannot be ignored. Discussions about applying different minimum wages by sector took place this year, but no conclusions were reached. However, it is now imperative to address the need for systemic improvements.
In fact, public members of the Minimum Wage Commission recommended establishing a task force to explore issues such as the application of the minimum wage to subcontracted workers and the possibility of differentiated rates by industry during this deliberation process. This should not be seen as a mere supplementary measure but as an essential task for the sustainability of the minimum wage system.
A higher minimum wage is not inherently better, nor is a lower one necessarily preferable. A balance must be struck among various factors, including workers' living stability, businesses' ability to pay, productivity growth, and job retention. This is why decisions cannot be made based solely on one side's logic.
It is time to move beyond the unproductive debate focused solely on percentage increases. We need to establish institutional mechanisms that can more accurately reflect industry characteristics, productivity, regional economic conditions, and business sizes. The structure for determining the minimum wage must evolve from a labor-management confrontation to a system based on objective economic indicators and data.
The minimum wage of 10,700 won has already been decided. The important thing is to avoid repeating the same conflicts at this time next year. Reforms are needed now to reduce the social costs of conflicts surrounding the minimum wage while achieving the dual goals of protecting workers and maintaining jobs. Creating sustainable standards is more important than merely fighting over numbers.
* This article has been translated by AI.
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