Minimum wage talks turn political

A council meeting trying to find a consensus between employers and unions on a new minimum wage base starting next year has ended without any resolution.

The labor sector insisted that the minimum hourly wage be raised to 10,000 won ($9), nearly 80 percent higher than the current 5,580 won. Management wants to keep the minimum wage unchanged. Never have labor and management been so much apart over wages since the base was negotiated through the council, which was created in 1988.

Negotiations could narrow the differences, but won’t be easy considering the big gap. Employer and labor representatives also differ on issues like applying a different minimum wage to different industries and requiring a specification of total monthly pay in addition to the hourly wage.

The debate between employers and labor has gotten more intense because the government and politicians are involved. Choi Kyung-hwan, deputy prime minister for the economy, raised expectations for a hike in the minimum wage by saying it must be higher. Labor was emboldened to put its highest bid of 10,000 won on the table. The Ministry of Employment and Labor then suggested that wages be calculated in monthly, as well as hourly, terms to make the figures look higher.

This is clearly not the right way to settle the differences. Wages should be decided between the employers and employees. Pay should be settled in consideration of labor productivity and rewards as well as employers’ conditions. The minimum wage directly affects small businesses and mid-sized companies and their employers.

According to a poll by the Korea Employers Federation and the Korea Federation of SMEs, one out of two companies said they would reduce hiring or scale down their workforce if the minimum wage gets too high.

About 15 percent of the labor force is paid the minimum wage, the highest ratio among industrialized countries. In most advanced countries, the ratio is less than 10 percent. If the base is raised according to the union demand, half of the country’s labor force would be receiving the minimum wage.

The minimum wage is not set to have most workers receive the same amount of earnings. A more reasonable figure should be agreed upon in consideration of the current economic, business and workers’ conditions. The main goal should be to help the economy and save jobs.

JoongAng Ilbo, July 4, Page 26