10,000 Won vs 8,410 Won... What Do You Think About Next Year's Minimum Wage?

6th Full Meeting of the Minimum Wage Commission Scheduled for Today (9th)
Labor: "Minimum Wage Must Be Raised" vs. Management: "Can't Endure"
President Moon: "Continued Efforts to Raise Minimum Wage"

Minimum Wage Commission. [Image source=Yonhap News]

[Asia Economy Reporter Heo Midam] As labor and management continue to struggle to narrow their differences over next year's minimum wage, the debate over the '10,000 won minimum wage' is intensifying.

The initial proposals for next year's minimum wage put forward by labor and management are 10,000 won (a 16.4% increase) and 8,410 won (a 1.2% decrease), respectively. The difference in amount is 1,590 won.

Labor argues that the minimum wage must be raised to address social inequality and polarization, while management insists that due to the severe economic impact caused by this year's COVID-19 pandemic, the pace of minimum wage increases needs to be moderated.

The Minimum Wage Commission, a social dialogue body that deliberates and decides on the minimum wage, will hold its 6th plenary meeting this afternoon (the 9th) at the Government Sejong Complex.

Park Junsik, chairman of the Minimum Wage Commission, has requested both labor and management to submit their first revised proposals for next year's minimum wage at today's plenary meeting.

The deliberation will proceed by narrowing the gap between the initial proposals from both sides. If neither side submits a revised proposal at today's plenary meeting, the decision on next year's minimum wage will be postponed to next week.

[Image source=Yonhap News]

The minimum wage has steadily increased without a single freeze over the past 20 years. It rose from 600 won in 1989 to 8,350 won last year, an increase of 7,990 won over two decades.

In particular, the increase accelerated after the inauguration of the Moon Jae-in administration. The minimum wage rose from 7,530 won in 2018 (a 16.4% increase from the previous year) to 8,350 won in 2019, a 10.9% increase, and was set at 8,590 won this year, a 2.87% increase. The average increase rate is about 10%.

However, this year is different. The economy is experiencing the worst recession due to COVID-19.

Management expresses concern that if the minimum wage is raised again under these circumstances, a significant number of companies will face operational difficulties.

At the 5th meeting held on the 7th, Ryu Kijeong, Executive Director of the Korea Employers Federation, said, "In the industrial field, there is no work itself, and companies are barely surviving on debt. It is extremely difficult for young part-timers to find jobs," adding, "Employer representatives submitted a minimum wage reduction proposal out of genuine desperation."

Lee Taehee, Head of the Smart Job Division at the Korea Federation of SMEs, also appealed, "In this unprecedented crisis, small and medium-sized enterprises and small business owners are barely surviving with the largest government subsidies ever," and "There are many complaints about not knowing how long they can hold out if COVID-19 is not controlled."

A convenience store owner A (38) in Yangcheon-gu, Seoul, said, "As the minimum wage keeps rising, I work longer hours myself rather than hiring part-timers," and added, "It's not about freezing the minimum wage, but raising it to 10,000 won seems a bit too much given the current situation."

He continued, "These days, it seems like the store owner is worse off than the part-timers. Originally, there were 2 to 3 more convenience stores around ours, but one has already decided to close down."

The small and medium-sized business sector also insists that next year's minimum wage should be at least frozen. On the 7th, the Small and Medium Business Council, composed of 15 small and medium-sized enterprise and small business associations including the Korea Federation of SMEs, held an emergency press conference at the Korea Federation of SMEs in Yeouido, Seoul, and announced the 'Small and Medium Business Sector's Position on the 2021 Minimum Wage.'

They stated, "We are barely surviving with various loans and government subsidies," and argued, "Since the minimum wage has risen by 32.8% over the past three years, cooperation from labor and the government is needed this year to at least freeze the minimum wage to protect workers' jobs."

On the morning of the 2nd, at the Korea Federation of Small and Medium Business in Yeongdeungpo-gu, Seoul, members of the Korea Convenience Store Owners Association shouted related slogans at a press conference urging a reduction in the minimum wage.
[Image source=Yonhap News]

On the other hand, labor argues that since last year's minimum wage increase was small, it should be raised above a certain level this year.

On the 2nd, the Busan branch of the Korean Confederation of Trade Unions (KCTU) held a press conference in front of the Busan Employers Federation in Dong-gu, Busan, urging a minimum wage increase.

They said, "So far, the KCTU and the Federation of Korean Trade Unions have stated in three meetings that the minimum wage should be at a level that sustains workers and their families," and "Therefore, labor proposed 10,000 won, a 16.4% increase from this year's minimum wage of 8,590 won."

They added, "However, employer representatives insisted on a minimum wage reduction as they did last year and ultimately proposed 8,410 won, a 2.1% decrease," and said, "Although management claims to be facing a crisis due to COVID-19, minimum wage workers are in a position where they must worry about losing their jobs or making a living."

They said, "The minimum wage is the minimum policy for those driven into crisis by COVID-19," and "Management should withdraw the minimum wage reduction proposal at the plenary meetings scheduled for the 7th and 9th and submit an increase proposal in accordance with the purpose and intent of the Minimum Wage Act."

Office worker Kim (28) also advocated for a minimum wage increase. Kim said, "Considering the prices in our country, at least 10,000 won is necessary to live with dignity. After deducting fixed costs such as monthly rent and food expenses, there is no money left," he lamented.

He added, "The minimum wage increase issue is important for young people," and said, "Just working at a job doesn't allow you to earn much money, and in the case of irregular workers, they don't even earn 1.8 million won a month. Shouldn't their wages be raised significantly?"

The government has expressed its intention to strive for a minimum wage increase. On the 8th, President Moon sent a video message to the 'Global Leaders Day' session of the International Labour Organization (ILO) Global Conference, saying, "In the post-COVID era, the digital economy is accelerating, and significant changes in jobs are expected," and "To respond to this, Korea is promoting the 'Korean New Deal' based on an 'employment safety net.'"

He continued, "We are continuously working to reduce working hours and raise the minimum wage," and said, "We will join the international community in efforts to improve workers' quality of life, including ratifying the core ILO conventions."