FKI Expresses Regret Over 5% Minimum Wage Increase Next Year

Statement on Next Year's Minimum Wage Decision to Be Announced on the 30th
"Urging Measures Such as Differential Application by Industry and Region"

Lee Dong-ho, Secretary General of the Korean Federation of Trade Unions and a worker member of the Minimum Wage Commission, speaking (second from the right). (Image source=Yonhap News)

[Asia Economy Reporter Moon Chaeseok] The Federation of Korean Industries (FKI) expressed regret over the decision to raise next year's minimum wage by 5% from this year to an hourly rate of 9,620 won.

On the 30th, the FKI released a statement saying that the minimum wage increase rate far exceeds the economic growth rate and inflation rate. According to the FKI, the average annual minimum wage increase rate over the past five years has been about 7.7%. South Korea's minimum wage level ranks third among the 30 OECD countries, based on the ratio of minimum wage to average worker wage.

The FKI criticized that raising the minimum wage like this amid an unprecedented crisis in the Korean economy, which is facing concerns of a 'perfect storm,' only increases the burden on businesses. The FKI stated, "With the unexpected Ukraine situation prolonging and causing rapid inflation, the economic burden on the public is increasing. If the minimum wage is also raised, it will lead to a vicious cycle of further price increases," adding, "The difficulties of the low-income economy will worsen, and countless small and medium-sized enterprises and self-employed businesses with reduced payment capacity will be pushed to the brink." They further added, "There is particular concern that the job situation will worsen, with low-skilled workers losing their jobs."

The FKI also once again called on the political circles and government to improve the system, which they have consistently pointed out. The FKI said, "We hope that the government and political circles will actively prepare improvement measures to minimize the side effects of minimum wage increases, such as differential application by industry and region, and including corporate payment capacity as a factor in determining the minimum wage."