[2021 National Audit] Minimum Wage Commission Chair: "Rapid Increase Negatively Affects Employment in Certain Groups and Industries"

Comprehensive Audit of Ministry of Employment by National Assembly Environment and Labor Committee on 21st

Chairman Park Junsik: "Opinions Differ but Negative Impact is Significant"
"Measures Needed for Excessive Influence in Specific Sectors"
Next Year's Minimum Wage 9,160 Won... Moon Administration's Average Annual Increase Rate 7.2%

Park Junsik, Chairman of the Minimum Wage Commission, is attending the National Assembly's audit on the Economic and Social Labor Committee, Central Labor Committee, and Minimum Wage Commission held by the Environment and Labor Committee at the National Assembly on the 12th, providing a work report. Photo by Yoon Dongju doso7@

[Sejong=Asia Economy Reporter Moon Chaeseok] Park Junsik, Chair of the Minimum Wage Commission, stated on the 21st, "Regarding the impact of minimum wage increases on employment, I believe there are considerable negative effects on certain groups, specific industries, and areas facing marginal situations."

Chair Park made this remark in response to a related inquiry by Im Ija, a member of the People Power Party, during the Ministry of Employment and Labor's comprehensive audit by the National Assembly's Environment and Labor Committee on the same day.

According to data on the "Scale of Job Loss Due to Minimum Wage Increases" disclosed by Rep. Im, the minimum wage increased by a total of 41.6% over five years starting in 2018 under the Moon Jaein administration. Consequently, the job scale is expected to decrease by a total of 632,000 positions.

Chair Park said, "I believe there are considerable negative effects of minimum wage increases on certain groups, specific industries, and areas facing marginal situations."

Rep. Im cited data from the Korean Labor Economics Association, mentioning that a 10% increase in the minimum wage results in an approximate 1.42% to 1.74% decrease in employment scale.

Chair Park added, "I understand that this year's Nobel Prize research topic also studied the impact of minimum wage on employment," and "Researchers' opinions are divided evenly regarding the impact of the minimum wage increase trend on employment."

He continued, "Nevertheless, I believe there are considerable negative effects on certain groups, industries, and areas facing marginal situations concerning the impact of minimum wage on employment," adding, "Especially in the COVID-19 situation, restructuring has severely affected industries that were originally undergoing changes even without COVID-19."

He further stated, "Even if the overall impact of the minimum wage on employment is neutral, it is necessary to prepare measures to address the excessively negative employment effects in specific sectors."

Meanwhile, in July, the Minimum Wage Commission, which includes labor and management members as well as public interest members, set next year's minimum wage at 9,160 won, a 5.1% (440 won) increase from this year's 8,720 won. The monthly conversion amount of next year's minimum wage (based on 209 working hours) is 1,914,440 won.

The minimum wage increase rates at the beginning of the current administration were 16.4% (2018) and 10.2% (2019) based on the application year. After that, it dropped to 2.9% last year and 1.5% this year, then rose again by 5.1% next year. The average annual increase rate over five years was 7.2%.