Challenges Persist in Era of 10,000 Won Minimum Wage

The minimum wage for next year has been set at 10,700 won per hour, but challenges surrounding the system remain unresolved. The rapid increase in platform workers complicates the determination of employee status and work hours under the current regulations. The proportion of workers earning less than the legal minimum wage is still in double digits. Voices are rising to examine not only the annual wage increase rates but also the application scope and practical effectiveness of the system.

According to the Ministry of Employment and Labor and the Korea Employment Information Service, as of 2023, the number of platform workers, including delivery riders, is estimated to be around 880,300. This figure has increased from 661,000 in 2021 to 795,000 in 2022, continuing an upward trend.

Platform workers are now engaged in various fields beyond delivery and driving, including domestic work, caregiving, information technology (IT), education, counseling, and design. However, many platform workers are classified as independent contractors or special employment workers rather than employees. Their compensation is based on the number of tasks completed or performance rather than hours worked, leading to ongoing debates over employee status and minimum wage calculations.

The current minimum wage law allows for a separate minimum wage to be set for subcontracted workers based on output or performance, as it is difficult to calculate wages on an hourly basis. However, there have been no instances of a separate minimum wage being established under this provision.

This year, the Minimum Wage Commission included the issue of minimum wage application for subcontracted workers in its official discussions for the first time. Labor representatives argued that minimum compensation should be guaranteed for each service provided by delivery riders and drivers. In contrast, business representatives expressed concerns about the difficulty of applying a uniform standard due to the varying nature of work and challenges in accurately measuring work hours. Ultimately, the proposal was rejected in a vote, with 11 in favor and 15 against.

However, recent court rulings are introducing new variables into the discussion of platform workers' employee status. On July 3, the Seoul High Court ruled that a rider working through a delivery platform application could be considered an employee under labor law if they were subject to specific direction and supervision from the company. The court noted that the rider could not independently secure customers and that their compensation and work methods followed the company's established criteria.

While this ruling does not universally recognize the employee status of all platform workers, it indicates that work allocation and control through applications and algorithms can serve as grounds for direction and supervision. This could significantly impact future discussions on the application scope of the minimum wage.

The issue of workers not receiving the minimum wage despite being subject to the system persists. An analysis of the economically active population survey by the Korea Employers Federation found that the minimum wage noncompliance rate for 2024 is projected to be 12.4%. This means that 1 in 8 wage workers is earning less than the legal minimum wage, with some sectors reporting noncompliance rates exceeding 30%.

Critics argue that simply raising the minimum wage will not achieve the system's goal of protecting low-wage workers. There is a need to comprehensively review how to protect workers who fall between traditional employees and independent contractors, as well as the payment capabilities of small businesses, labor inspections, and support measures.

Public members of the Minimum Wage Commission have also recommended that the Ministry of Labor establish a task force for system improvements during next year's minimum wage deliberations, urging a comprehensive review of the application scope and determination criteria. They believe that as employment forms rapidly change due to the spread of artificial intelligence (AI) and the growth of the platform industry, the commission has been repeating similar discussions each year.

Kim Gi-seung, a professor of economics at Pusan National University and former president of the Labor Economics Association, stated, "Platform workers differ significantly from traditional wage workers, and we need to consider not only including them in the current minimum wage system but also exploring separate protection methods. The annual discussions tend to focus solely on wage increases and amounts, but we must also comprehensively address the application scope, noncompliance rates, and the changing nature of employment across sectors and regions."