Prospects for Minimum Wage Decision on 18-19th
Focus on 10,000 Won Breakthrough and Labor-Management Agreement Potential
On the afternoon of the 5th, in front of the National Police Agency in Seodaemun-gu, Seoul, participants at the "General Strike Victory Rally" organized by the Korean Confederation of Trade Unions are holding signs urging an increase in the minimum wage. [Image source=Yonhap News]
The minimum wage level for next year is expected to be decided on the 18th or 19th of this month. As discussions reach their final stages, attention is focused on whether the minimum wage will surpass the historic '10,000 won' mark for the first time and the possibility of labor-management agreement for the first time in 15 years.
According to the Ministry of Employment and Labor on the 16th, the Minimum Wage Commission plans to hold its 14th plenary meeting at 3 p.m. on the 18th at the Government Complex Sejong. Considering that the deadline for announcing the minimum wage under the Minimum Wage Act is August 5, the minimum wage level is expected to be decided late at night on the 18th or early morning on the 19th.
Initially, it was anticipated that a conclusion would be reached late on the 13th or early on the 14th, but discussions were extended as the public interest commissioners of the Minimum Wage Commission emphasized labor-management agreement.
Currently, the labor side and the management side have proposed their 6th revised proposals at 10,620 won and 9,785 won respectively. This represents an increase of 10.4% and 1.7% compared to this year's minimum wage (9,620 won). The gap has narrowed from an initial 2,590 won to 835 won.
The public interest commissioners have requested the submission of a 7th revised proposal at the next plenary meeting, so the gap may narrow further.
It remains to be seen whether labor and management can reach an agreement as the public interest commissioners desire.
The Minimum Wage Commission operates as a consensus body composed of worker representatives from the labor side, employer representatives from the management side, and public interest commissioners, but labor-management agreements are very rare. Therefore, in recent years, decisions have been made by voting on mediation proposals presented by the public interest commissioners as a matter of practice.
As controversies have repeatedly arisen over the inadequacy of the 'calculation formula' used when public interest commissioners exercise their 'casting vote' power in creating mediation proposals, this year there is an atmosphere of making efforts to achieve labor-management agreement as much as possible.
In recent two years, the public interest commissioners have used the calculation formula 'economic growth rate forecast + consumer price inflation forecast - employment increase forecast,' but the management side has opposed this formula, arguing that the company's payment capacity is not reflected, while the labor side has objected that the formula does not consider the livelihood costs of vulnerable workers.
If labor and management set next year's minimum wage level by agreement as the public interest commissioners hope, it will be the first time in 15 years since 2008 (applied in 2009).
However, the likelihood of actual labor-management agreement is low because the gap between the labor and management positions remains large. Especially this year, the confrontation is fiercer over inflation and economic recession.
The labor side insists that the minimum wage must be significantly increased to ensure the survival of low-wage workers amid steep inflation, but the management side counters that a significant increase is unacceptable as many small business owners and micro and small enterprises are pushed to their limits due to rising labor costs and economic recession.
On the 19th of last month, members of the Korean Government Employees' Union affiliated with the Korean Confederation of Trade Unions held a press conference near the Presidential Office in Yongsan-gu, Seoul, urging for the 2024 minimum wage increase. Photo by Jin-Hyung Kang aymsdream@
If labor and management ultimately fail to reach an agreement, it is highly likely that the decision will again be made by voting on the mediation proposal of the public interest commissioners.
Kim Jun-young, former worker representative and Secretary-General of the Korean Metal Workers' Union affiliated with the Korean Confederation of Trade Unions, is currently detained due to a 'watchtower sit-in' protest, so the Minimum Wage Commission is now unbalanced with 8 worker representatives, 9 employer representatives, and 9 public interest commissioners.
However, if, as in previous years, both labor and management oppose the mediation proposal of the public interest commissioners and all or some members walk out, this imbalance is analyzed to have little impact on the final result.
The biggest point of interest is whether the minimum wage will surpass 10,000 won for the first time in history. Next year, if the increase rate is 3.95% or higher, it will exceed 10,000 won. Recent increase rates were 5.05% in 2022 (9,160 won) and 5.0% this year (9,620 won), both exceeding 5%.
There are rumors that the government has created guidelines to set the minimum wage around '10,000 won,' so if the actual minimum wage is decided below 10,000 won, the labor side is expected to strongly oppose it.
Yang Kyung-soo, Chairman of the Korean Confederation of Trade Unions, pointed out at the 'National Rally for the Resignation of the Yoon Seok-yeol Administration' held the day before, saying, "This is a minus government that suppresses the minimum wage," and "It is driving workers and ordinary people to death."
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