At the Minimum Wage Committee meeting to determine the minimum wage for next year, labor and management clashed over the issue of applying different minimum wages by industry. The management sector said, 'We must consider the payment capacity of vulnerable industries,' while the labor sector countered, 'Differentiated application by industry undermines the fundamental purpose of the minimum wage system.'
The Minimum Wage Committee held its 5th meeting on the 17th at the government Sejong office and discussed the topic of 'differentiated application of the minimum wage by industry.'
The Minimum Wage Act stipulates that the minimum wage 'can be applied differently by type of business.' However, this has only been actually implemented in the first year the system was enacted in 1988, and since then, a 'single' minimum wage system has been maintained.
The management sector argued that differentiated application by industry is necessary. Ryu Gi-jeong, executive director of the Korea Enterprises Federation (KEF), noted, 'The cumulative minimum wage increases applied uniformly without distinction by industry have become an unbearable burden for small and medium-sized enterprises and small business owners,' adding, 'The actual labor cost of hiring one minimum wage worker amounts to 140% of the legal minimum wage.'
He stated, 'Due to this labor cost burden, the proportion of workers earning below the minimum wage last year was 12.5%, and in industries such as accommodation and food services, it exceeded 30%,' arguing that 'it is necessary to introduce differentiated application for some industries where it is difficult to endure the current minimum wage level.'
Lee Myung-ro, head of the Workforce Policy Division at the Korea Federation of Small and Medium Enterprises, also noted, 'According to our own survey, 92.1% of small business owners responded that differentiated application of the minimum wage is necessary,' and added, 'There are large concerns that this differentiated application will lead to recruitment difficulties, while in some industries, worries about closures and workforce reductions due to the application of higher minimum wages are a greater concern than recruitment difficulties.'
On the other hand, the labor sector expressed strong opposition. Ryu Gi-seop, secretary-general of the Korean Confederation of Trade Unions, stated, 'Differential application by industry would increase the stigma of low wages and exacerbate labor shortages, and there are concerns about side effects such as hollowing out of industries and job aversion,' adding, 'We need to intensify discussions on the minimum wage level in line with revitalizing consumer recovery amid prolonged domestic economic recession.'
Lee Mi-sun, vice chair of the Korean Confederation of Trade Unions (KCTU), also argued, 'Differential application undermines the basic purpose of the minimum wage system,' and pointed out, 'Looking at cases of differentiated application by industry abroad, they are all upward applications that exceed the minimum wage determined by the state. The International Labour Organization (ILO) also specifies to apply upward in industries with 'greater payment capacity.'
Meanwhile, at the meeting that day, the discussion on the minimum wage level for next year did not gain traction. Earlier, the labor sector held a press conference on the 11th, demanding that the minimum hourly wage for next year be set at 11,500 won, which is 14.7% higher than this year's rate of 10,030 won. The management sector has not yet presented its initial proposal. Lee In-jae, chair of the Minimum Wage Committee, requested, 'Please submit the initial proposal at the next meeting.' The next full committee meeting will be held on the 19th.