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Minimum wage to surpass 10,000-won mark for first time in 2025

Published: 12 Jul. 2024, 15:56 Updated: 12 Jul. 2024, 18:23

SHIN HA-NEE
[email protected]

Lee In-jae, the Minimum Wage Commission chairman, walks past a screen showing the result of the minimum wage increase voting held at the government complex in Sejong on Friday. The minimum wage for next year was set at 10,030 won ($7.28), up 1.7 percent from this year. [YONHAP]

The minimum wage in Korea will rise to 10,030 won ($7.28) an hour next year, a 1.7 percent increase from this year.

While it marks the first time that the compulsory hourly wage has reached a five-digit figure in the local currency, the annual increase is the second-smallest ever.

The decision was made by the Minimum Wage Commission during its 11th plenary meeting on Friday.

The hourly wage will be upped by 1.7 percent, or 170 won, from this year’s 9,860 won. This brings the minimum monthly salary to 2.1 million won based on a 40-hour workweek.

With the increase, the minimum wage will surpass the historic 10,000-won mark 37 years after the legal hourly rate system was first implemented and 11 years after breaching the 5,000-won threshold.

The Minimum Wage Commission, a 27-member body with nine commissioners each representing the public interest, workers and employers, decides the minimum wage increase each year.

After a series of revisions to the initial proposals, the employers suggested a 1.7 percent increase to 10,030 won while the workers proposed a 2.6 percent increase to 10,120 won during the 11th meeting.

The smaller increase received 14 votes while labor's proposal received nine from 23 members present in the final voting, as four members representing the Korean Confederation of Trade Unions (KCTU) boycotted the vote in protest against the proposed wage range.

“The minimum wage increase rate has lagged behind consumer price increases for three years in a row, adding woes to public concerns that ‘everything is rising except for wages’,” the KCTU said in a statement released Friday.

The Ministry of Economy and Finance and the Bank of Korea project this year’s headline inflation to come in at 2.6 percent. In 2023, the consumer price index rose 3.6 percent, while the minimum wage for this year increased 2.5 percent.

On the other hand, small business owners expressed strong dissatisfaction with the wage increase despite the small scale.

“Small businesses, which account for 95.1 percent of the total number of businesses registered in Korea, have reached their solvency limits amid slumping sales and high costs,” said the Korea Federation of Micro Enterprises in a statement Friday.

“The latest decision, in particular, breached the 10,000-won mark, the economic and psychological threshold for small businesses,” the federation argued, stressing that “it is an irresponsible decision ignoring the reality of small business owners.”

Meanwhile, the Korea Chamber of Commerce and Industries noted that “the increase reflected the difficult reality faced by small and mid-sized enterprises (SMEs) and small business owners,” in a statement published in the name of Kang Seog-gu, the executive director of the business lobby group’s research division.

“However, considering that the minimum wage has been rising at a steeper rate compared to the growth in labor productivity, the burden on SMEs and small business owners seems to be inevitably heightened,” said Kang.

BY SHIN HA-NEE, CHO YONG-JUN [[email protected]]