5% minimum wage increase recommended, falling short of inflation

Economy

Published: 30 Jun. 2022, 16:43

5% minimum wage increase recommended, falling short of inflation

Minimum Wage Commission Chairman Park Joon-shik, right, and Lee Dong-ho, a general secretary at the Federation of Korean Trade Unions, shake hands following a meeting held at the government complex in Sejong early Thursday. [NEWS1]

The minimum wage will rise to 9,620 won ($7.40) an hour in 2023, up 5 percent.

On Wednesday, the Minimum Wage Commission voted on the increase during a meeting at a government complex in Sejong.

The new rate translates to a monthly wage of 2.02 million won and an annual salary of 24.13 million won. It is the required minimum for all industries.

The commission of 27 includes representatives from labor, management and the general public, including academics.

Voting was not unanimous, with twelve in favor of the five percent increase, 10 abstaining and one person voting against it.

Management recommended a 1.9-percent increase to 9,330 won in the final round of negotiations. Labor proposed a 10-percent increase to 10,080 won. Representatives from public wanted the minimum wage to be in a range of 9,410 won to 9,860 won, a 2.7-percent to 7.6-percent increase.

The five-percent increase was a "decision that overlooked the reality of the self-employed struggling to endure" in the face of high inflation, increasing interest rates, the falling won and lingering effects of the pandemic, said the Korea Enterprises Federation on Wednesday, adding that it "disapproves" of the wage increase.

The federation added that the minimum wage increase should be different for different industries.

The Korean Confederation of Trade Unions (KCTU), which represents labor, also objected with the minimum wage decision, saying the increase is not enough to balance inflation.

They argued on Thursday that their "real wage declined" considering the rapid rise of consumer prices. Consumer prices in Korea were up 5.4 percent on year in May.

In the United States, the minimum wage is $7.25 nationally, but higher in some areas — it is $15.00 in New York city.

A spokesperson for the KCTU, who is also a member of the commission, said 9,620 won is a "frustrating amount," adding that they will fight for the "low-income laborers and against the inequality of their low-paid lives."

The commission is required to present the new minimum wage to the labor minister, who is then required to announce it publicly by Aug. 5. It was the first time in eight years that the commission delivered its verdict on time.

The minimum wage is effective on January 1 in 2023.

During the Moon Jae-in administration, the minimum wage was increased rapidly, with a 16.4 percent jump in 2018, 10.9 percent in 2019, 2.9 percent in 2020 and 1.5 percent in 2021.

BY JIN MIN-JI [jin.minji@joongang.co.kr]