The minimum wage for 2027 has been determined, but labor and management failed to reach an agreement this year. The final proposals from both sides were 30 won apart, leading to a decision by vote instead of consensus. This has raised concerns about the effectiveness of the minimum wage determination system and the need for practical improvements.
On July 15, relevant authorities reported that the Minimum Wage Commission has set the minimum wage for 2027 at 10,700 won per hour, a 3.7% increase (380 won) from this year's wage of 10,320 won. After failing to reach an agreement on the public interest committee's recommendation, the labor sector proposed 10,730 won, while the management side suggested 10,700 won, resulting in a vote that favored the employer's proposal.
Commission Chairman Kwon Soon-won expressed disappointment over the lack of agreement, stating, "It is quite regrettable that we could not reach a consensus, and I feel a significant sense of responsibility as the chairman. The final amendment was only 130 won apart, and the vote was conducted with a 30 won gap, so I consider it a vote akin to an agreement."
The structure of determining the minimum wage through voting rather than consensus has become entrenched. Since the implementation of the relevant system in 1988, there have only been eight instances where the minimum wage was set through labor-management consensus. Last year marked the first agreement in 17 years, but it was marred by the exit of members from the Korean Confederation of Trade Unions (KCTU).
The current structure, which includes nine representatives each from workers, employers, and public interest members, is seen as a barrier to reaching consensus.
There is also significant uncertainty surrounding the system. The Minimum Wage Act stipulates that the minimum wage should be based on factors such as workers' living costs, wages of similar workers, labor productivity, and income distribution rates. However, there is no specific formula established for these criteria. New forms of employment, such as platform labor, are emerging, which fall outside the current labor laws.
In response, public interest members have recommended that the government improve the system. They have called for the establishment of a 'System Improvement Task Force' within the Ministry of Employment and Labor in the second half of this year to comprehensively review and research the applicable targets and determination criteria, and to develop a comprehensive improvement plan.
This year's discussions included proposals for differentiated application by industry and separate minimum wage applications for subcontracted workers, both of which were ultimately rejected after voting. Discussions continued regarding whether the current system adequately covers workers who are employed through platforms or whose wages are difficult to calculate on an hourly basis, but no conclusions were reached.
Chairman Kwon stated, "The minimum wage system has maintained its basic framework for nearly 40 years, with changes only in its application scope, and there are many areas that require improvement. The essence of the recommendation is for the Ministry of Labor to seek system improvements based on the issues encountered during the deliberation process of the Minimum Wage Commission."
The Ministry of Labor, which has received the recommendations from the Minimum Wage Commission, has also decided to engage in discussions on system improvements. The government has outlined 'improvements to the operation of the Minimum Wage Commission and the criteria for determining the minimum wage' as part of its national agenda. A ministry official stated, "We are still in the review stage, but we will approach this by addressing the operational issues of the Minimum Wage Commission and improving the discussion structure."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.