[Takryucheongron] Minimum Wage Debate Must Break Free from Past Frames

Joo-Hwan Lee, Research Fellow at the Korea Labor and Society Institute

The minimum wage is a favorite issue of the media. However, it usually has not been covered starting from April. Articles flood out ahead of June, when the full-scale tripartite discussions on determining the next year’s minimum wage level begin.

But this year is somewhat different. As an unprecedented epidemic of the 21st century has spread and social anxiety and risks have increased overall, the issue has been brought into the public discourse earlier. Small business owners in sectors severely hit by COVID-19, such as lodging and food services, arts, leisure, and sports industries, seem particularly curious. Against the backdrop of their fears and anxieties, some media outlets are asking: Surely the minimum wage won’t rise much next year, right?

To put it bluntly, it probably will not. The purpose of the minimum wage system is to stabilize workers’ livelihoods and improve the quality of the labor force. By doing so, it contributes to the sound development of the national economy. In other words, the function of the minimum wage system is to improve the quality of jobs. However, the International Labour Organization recently warned that globally, between 5.3 million and 24.7 million jobs could disappear due to the impact of COVID-19. The economic fallout might even surpass the 2008 global financial crisis, which caused about 22 million unemployed. South Korea cannot escape this either. Given the already increasing risks to the national economy, there is no need to exacerbate instability by excessively raising the minimum wage. All tripartite public interest committee members participating in the minimum wage deliberations are likely aware of this point.

The minimum wage system was first brought into public discussion in South Korea in the 1960s. This was due to the rapid industrialization aftermath, which increased the number of workers earning wages below the minimum cost of living. The labor sector proposed it almost every year at the time, and the government seriously considered it, but it was not introduced for a long time. The minimum wage system was legislated in 1988, during the so-called “three lows” boom and the aftermath of large-scale labor struggles, when wages were rapidly rising across society.

Meanwhile, the minimum wage system, which had not attracted much attention for a while after its introduction, became a political issue in the late 1990s. This was after the 1997 IMF economic crisis, which increased irregular employment and raised related problems as issues. More recently, it has been linked with youth unemployment and the low-growth trend. In short, the minimum wage system in South Korea has evolved closely in response to the development of the national economy and social circumstances.

It will likely continue to do so even amid difficulties caused by COVID-19. As is well known, South Korea is one of the world’s exemplary countries in responding to COVID-19. This is not limited to effectively preventing the spread of the disease. The Korean government has been broadly gathering information on socioeconomic problems caused by COVID-19, preparing countermeasures, and implementing them decisively. Even from the employment and labor perspective, the institutional employment safety net is being maximally utilized, emergency livelihood support measures have been prepared for vulnerable groups outside the employment safety net, and discussions are underway to introduce an unemployment assistance system. In short, our society has the capacity, centered on the government, to overcome social difficulties.

Before and after COVID-19, much in the world will change. What we need to prepare for now, to fully deliberate the minimum wage in the upcoming June, is to carefully explore what these changes mean?not to weigh pros and cons based on past frameworks.

Lee Joo-hwan, Research Fellow, Korea Labor & Society Institute