Labor and small business groups have both raised objections regarding next year's minimum wage. The labor sector is protesting the exclusion of special employment and platform workers from the protection scope, while small business owners argue that even a 3.7% increase is too burdensome.
However, experts suggest that the likelihood of a review is low, as there has been no precedent for objections being accepted since the minimum wage system was implemented.
On July 27, the Small Business Association held a press conference near the government complex in Sejong, expressing their intent to challenge the minimum wage decision for next year. The Korean Confederation of Trade Unions also held a press conference in front of the Seoul Regional Employment and Labor Office, marking the first objection since the union's challenge to the 2024 minimum wage three years ago.
Earlier, the Minimum Wage Commission decided on July 14 to raise next year's minimum wage by 380 won (3.7%) to 10,700 won per hour. This translates to a monthly amount of 2,236,300 won based on 209 working hours, an increase of 79,420 won from this year.
The labor sector's objection stems from the exclusion of minimum wage protections for contract workers. This year, the issue of whether to apply a separate minimum wage for contract workers was raised for the first time at the commission, but it was rejected.
The Korean Confederation of Trade Unions argues that delivery riders, parcel delivery drivers, substitute drivers, private tutors, caregivers, and appliance installers, even without formal contracts, work under conditions similar to regular employees. A recent ruling by the Seoul High Court recognizing delivery riders controlled by platform applications as workers under labor law has also been cited as a basis for the objection.
Goo Kyo-hyun, head of the Public Transport Workers' Union Riders' Union, stated, "The Minimum Wage Commission is responsible for determining minimum wages, not for deciding who qualifies as a legal worker. We need to revisit the minimum wage for contract workers in light of court rulings and international standards."
On the other hand, the business sector claims that the planned increase in the minimum wage exceeds the payment capacity of small businesses. The 3.7% increase is the highest in four years.
The Small Business Association estimates that the wage burden per worker will increase by approximately 953,000 won annually due to the minimum wage hike. They note that four out of ten small business owners report that their average monthly operating profit does not reach 2 million won, indicating a low acceptance rate in the field.
Additionally, they point out that the total loan balance for self-employed individuals rose to 1,092.9 trillion won by the end of last year, with the delinquency rate nearly tripling to 12.14% over four years.
Song Chi-young, president of the Small Business Association, said, "In the face of declining profits and economic downturns, this increase will hasten job cuts among small businesses. We urgently need a review to protect the survival rights of small business owners and prevent a crisis in employment."
However, the consensus is that the chances of a review following the objections are slim. According to the Minimum Wage Act, representatives of workers and employers can file objections with the Minister of Labor within ten days of the minimum wage announcement.
If the Minister finds the objection valid or recognizes that it is difficult to determine the minimum wage as proposed by the commission, they can request a review from the commission. The final minimum wage will be confirmed and announced by the 5th of the following month.
Since the implementation of the minimum wage system in 1988, objections from labor and management groups have been frequent, but the Ministry of Labor has never accepted these objections for a review. There were no objections filed for the minimum wage set for 2025 or the 2026 minimum wage determined by last year's labor-management agreement.
Notably, the issue of contract worker applicability raised by the Korean Confederation of Trade Unions was separately voted on and rejected by the commission. Furthermore, public interest representatives have recommended that the commission review the applicability of the system in the second half of this year. Therefore, the government is likely to pursue long-term system improvements in this area.
* This article has been translated by AI.
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