Labor, management struggle to narrow gaps over next year's minimum wage

All News 11:41 June 17, 2021

SEOUL, June 17 (Yonhap) -- Labor and management representatives met this week to negotiate the details of next year's minimum wage but came away with little progress after clashing on whether the rate should be hourly or monthly.

The Minimum Wage Commission, a trilateral panel composed of nine representatives each from labor, management and the general public, held its third meeting this year Tuesday to begin negotiations in earnest.

The Minimum Wage Commission holds its third plenary session this year at the government complex in Sejong, about 120 kilometers south of Seoul, on June 15, 2021. (Yonhap)

The commission holds plenary meetings around this time each year to set the following year's minimum wage before Aug. 5, the legal deadline by which the Ministry of Employment and Labor must notify the public of the new rate.

On the table are decisions on the actual rate, as well as whether it should be hourly or monthly and differentiated across industries.

Tuesday's talks centered on the debate over hourly or monthly, with labor representatives demanding that the official rate be monthly, with the hourly equivalent noted separately, to account for workers' monthly spending patterns.

The management side, however, insisted that the minimum wage be kept at an hourly rate, an argument that is directly tied to its resistance to including paid weekly off-hours in total monthly working hours.

Last year, the minimum hourly wage for 2021 was set at 8,720 won (US$7.73), which represented the smallest-ever annual increase of 1.5 percent.

A major clash between labor and management was avoided in part due to the unprecedented COVID-19 crisis. But this year, workers have complained of falling real income in a prolonged pandemic marked by growing income inequality and rising prices.

Businesses, for their part, have complained of rising debts and losses in sectors hit hard by the government's social distancing regulations, including restaurants, hotels and the travel industry.

"The current minimum wage is ridiculously low," Lee Dong-ho, secretary general of the Federation of Korean Trade Unions, one of the country's major umbrella unions, said during Tuesday's session. "A single worker's monthly living costs are estimated at 2.09 million won, which is 270,000 won more than the 1.82 million won that is the monthly equivalent of this year's minimum wage."

Kim Seong-hee, a professor at the Korea University Graduate School of Labor Studies, told a forum last month that he suggests a minimum increase of 7 percent to factor in the rate of economic growth, inflation and other calculations.

Other experts warned, however, that a sudden minimum wage hike could result in fewer jobs. According to a survey commissioned by the Korea Economic Research Institute, increasing the rate from the current 8,720 won to 10,000 won could lead to a loss of 125,000-304,000 jobs.

The Korean Confederation of Trade Unions, another labor umbrella group, has announced plans to hold a rally of 10,000 workers in Seoul on July 3 to protest what they call an inadequate minimum wage.

The commission has scheduled a fourth plenary meeting next Tuesday to continue the negotiations.