Opposition Voices Call to Improve 'Tongsang Wage' That Can Be Lower Than Minimum Wage

Voices Calling for Revision of Labor Standards Act Proposed Last Month by Park Hong-bae

Voices from the opposition party have called for improvements to the 'ordinary wage system,' which can be set lower than the minimum wage.

On the 9th, Park Hong-bae, a member of the Democratic Party of Korea, and the National Office Finance Service Labor Union held a press conference at the National Assembly to urge the passage of the 'Labor Standards Act (Park Hong-bae bill)' that clearly defines 'ordinary wage' and sets it higher than the minimum wage.

Park Hong-bae, a member of the Democratic Party of Korea, is giving an interview to Asia Economy at the National Assembly on the 26th. Photo by Kim Hyun-min

They pointed out, "The ordinary wage serves as the basis for various allowances such as suspension pay and holiday work pay, and is also the foundation for various salary payments under laws like the Employment Insurance Act and the Industrial Accident Compensation Insurance Act. However, the current Labor Standards Act does not clearly define ordinary wage, leading to ongoing disputes over its calculation and a reality where only precedents are relied upon."

In particular, Park and others stated, "Some employers exploit legal loopholes by reducing the basic salary and increasing welfare expenses and bonuses, which are excluded from the scope of ordinary wage, in a method called 'basic salary splitting.' They even set the basic salary lower than the minimum wage and evade minimum wage payment through allowances, engaging in such 'tricks.'"

They introduced, "A survey of call center workplaces in the insurance industry in 2023 revealed that eight insurance companies paid basic salaries below the minimum wage and evaded responsibility under the pretext of 'allowances' that are not included in the ordinary wage."

The Labor Standards Act proposed by Park last month aims to ensure legal stability by defining ordinary wage within the Labor Standards Act. It also includes measures to protect workers' minimum wage levels by revising the law to apply the minimum wage amount as the ordinary wage if the ordinary wage falls below the minimum wage.