Minimum wage’s magical act

The government last week announced a new hourly minimum wage of 6,470 won ($5.90) for next year, up 7.3 percent from this year’s 6,030 won. Eight hours’ work per day, or 209 hours for a full month, would translate into monthly earning of 1,352,230 won.

It is basically the base salary as it excludes bonuses, overtime and welfare compensation. The Ministry of Employment and Labor awaited appeal following the decision of a revised base salary for next year by the minimum wage commission, but both labor and employers did not file a petition despite their earlier opposition to the new rate. A group of small merchants appealed, but was rejected.

The minimum wage commission — comprising nine representatives each from the government, employers, and employees — has always disappeared from the scene after its work was done. It will likely re-emerge in April when review for a 2018 minimum wage should begin.
It’s a repeated act. The commission rocks the nation and then silently exits. The pattern will go on unless the system is overhauled. We know what it will say in April next year as it opens the table for new discussions on wages. It is likely to vow to study the problems in current wage-setting system and come up with new measures after it is done reviewing new base rate for 2018.

The opposition took initiative by motioning bills to revise the wage-setting system. Labor has joined the campaign. The political sector has made the first move to set the grounds to raise the base wage to 10,000 won. To it only the base figure matters. Politicians do not care about a broader reforms to set different wage bases for industries and regions, or the idea of connecting the base salary to labor incentive tax to help income for poorer and temporary workers. Nor do they think about urging the commission to come up with a reform outline. The institution itself is of no use.

Nine members representing the labor sector resigned themselves. One of the government members, Yoon Hee-sook, the research chief of the Korea Development Institute, also walked out, saying the commission is dominated by arrogance and politics.

The commission blames the members instead of the system. It claims that the members continue with wasteful wrangling and lack will for productive debating. It said Yoon resigned because she, in her first year on the commission, might have not been used to the harsh exchange between employers and employees. Such lame and irresponsible excuses coming from a state institution is hardly adequate.

The minimum wage is pivotal to the campaign to realign the growth model led by income. Proponents of such growth models reason that higher income leads to higher spending. They demand that 10,000 won should be the minimum wage. There is little consideration for the sustainability or competitiveness of the workforce. It becomes a popular platform during elections. It is contested by all presidential hopefuls. It has become a hot potato, yet the commission in charge of the agenda is carefree.

It stays to its corner and refuses to come up until its call in April. When it does, the controversial scene repeats itself. The commission well knows that minimum wage should not become a political matter. Council chief Park Jung-sung maintains the issue should be addressed in economic and management context. The members are also aware that the council meetings have turned into a scene similar to collective bargaining. They also agree that they must differentiate the minimum wage system according to workplace size and industry and connect it with the tax code. They are neglecting their roles and condoning the matter to become a political issue by keeping silence. If they do not wish to be called cowards, they must make a rightful stand and act like an economic body serving the interests of the populace.

JoongAng Ilbo, Aug. 15, Page 28