Rising Labor Costs Weigh on Farmers Amid Minimum Wage Increase

As the minimum wage is set to rise by 3.7% next year, farmers are increasingly burdened by labor costs. Given the labor-intensive nature of agriculture, this increase in minimum wage is expected to lead to higher production costs. There are concerns that the wage hike could eventually drive up food prices.

According to the agricultural sector on July 15, the minimum wage for next year has been established at 10,700 won, deepening farmers' worries about labor shortages. With high exchange rates and fuel prices, the costs of fertilizers, pesticides, and feed have already risen, and now the risk of increased labor costs has become a reality.

Farmers are already feeling the strain of rising labor costs. According to the National Data Agency's 2025 Economic Survey of Farms and Fisheries, the average agricultural management cost last year was 28.206 million won, a 3.4% increase from the previous year. Notably, labor costs reached 2.675 million won, marking a 41.8% increase since 2020, which now constitutes 9.5% of total agricultural management costs.

Farmers are particularly concerned about the sharp rise in labor costs during peak farming seasons. Demand surges in spring and fall, but labor shortages lead to increased wages. Competition among farmers for available labor has intensified, with some paying more than double the usual rates. As the minimum wage rises, there are fears that labor costs during peak seasons will also increase.

Farms that rely heavily on manual labor, such as vegetable growers and livestock producers, are expected to be significantly impacted by the minimum wage increase. Additionally, recent regulations requiring compliance with housing standards for foreign seasonal workers (E-8 visa holders) add to the burden on farmers. The combination of rising minimum wages and stricter regulations is directly translating into increased costs for farmers.

While the minimum wage increase may not immediately affect food prices, agricultural product prices are determined by factors such as crop yields, weather conditions, supply and demand, and distribution costs. Moreover, individual farmers often struggle to pass on increased production costs to their selling prices.

However, analysts warn that the accumulated burdens will inevitably return as a boomerang effect. There is a possibility that the increase in labor costs will eventually be reflected in selling prices. If farmers unable to bear the rising labor costs reduce their cultivation areas or abandon farming altogether, it could lead to a decrease in supply.

In response, voices within the agricultural sector are calling for the expansion of a 'public seasonal labor program.' This would reduce the ancillary costs incurred when individual farmers directly hire foreign workers, such as housing and workers' compensation insurance.

There are also calls to strengthen support for agricultural mechanization. An industry representative stated, "The government needs to invest actively in the mechanization of vegetable farming with a long-term perspective to alleviate the labor cost burden on farmers. Currently, many farms still rely on tractors, so it is necessary to consider enhancing financial support for the purchase of various agricultural machinery."