The South Korean government on Friday endorsed the proposed minimum wage of 8,350 won ($7.4) for next year, which would raise the legal hourly wage floor by another 10.9 percent after this year’s 16.4 percent jump despite protests from employers and threat of collective action from small merchants and self-employed.
The Ministry of Employment and Labor on Friday announced the new universal minimum wage rise in its official gazette after review of appeals from a number of business groups both big and small demanding a smaller gain or a differentiated rate system by scale, nature, and regional base of businesses.
“We have thoroughly studied the appeals but decided to respect the decision by the independent body of the Minimum Wage Commission,” said Kim Young-joo, Minister of Employment and Labor in a press conference.
The Minimum Wage Commission, comprised of representatives from the government, labor unions, and employers, on July 14 set next year’s minimum wage rate at 10.9 percent in a meeting boycotted by employers members after the commission struck down the option of differentiating the rates by business and region and expanding the scope of wage base.
The move sparked rallies and threat of collective actions including shutdown of stores and boycott of the legal wage by self-employed and small merchants who decried that they would go out of business because they cannot afford near 30-percent rise in wages over just two years.
The liberal government’s drive to make minimum wage 10,000 won within three years faced major challenge after data showed sharp drop in jobs in retail, wholesale, restaurant, and hospitality segments that mostly pay workers by minimum wage as well as income of the bottom-income bracket.
The worsening job and income conditions for the poor and young translated into the slump in approval rating for President Moon Jae-in.
Kim said the government will increase subsidies to more hard-up employers within the government budget. The government proposed similar budget of 3 trillion won it allocated for this year to subsidize small employers for the increased labor cost for next year as well.
He also said the government will seek “social dialogue” to find a rate framework differentiating wage level by business, region, and scale.
By Sohn Il-seon and Lee Eun-joo
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]