The Minimum Wage Commission decided on the 10th to set the hourly minimum wage for next year at 10,320 won. This decision was made through a labor-management agreement for the first time in 17 years since 2008. The increase in the minimum wage for next year is 2.9%, the lowest rate among the first minimum wage increases of previous governments in the 2000s.
However, during the labor-management agreement process, the worker commissioners from the Korean Confederation of Trade Unions (KCTU) exited, leading to criticism that it was a "partial" agreement. In response, Chairperson Lee In-jae noted, "I regret that the KCTU commissioners left midway, but I believe we did our best until the end," adding, "I think this confirms our capabilities in resolving conflicts through agreements."
◇Agreement reached 80 days after the first labor-management meeting… past the legal deadline
The Minimum Wage Commission, which determines next year's minimum wage level, began its first meeting on April 22 and held a total of 12 meetings by July 10.
The discussions on the minimum wage level began between labor and management at the 6th meeting on June 19. The Commission had previously discussed the expansion of minimum wage application to subcontract workers and the application of industry-specific distinctions.
The initial minimum wage demand gap between labor and management was 1,470 won. The workers proposed a minimum wage of 11,500 won, a 14.7% increase from this year, while the employers suggested freezing it at 10,030 won. Although this gap was narrowed to below 1,000 won after six rounds of revisions, it did not close much thereafter.
As a result, the Commission continued to deliberate past the legal deadline. The Commission must submit a decision on the minimum wage level to the Minister of Employment and Labor within 90 days of receiving the request for review. Considering that former Minister of Employment and Labor Kim Moon-soo requested a review on March 31, this year's legal deadline was June 29.
The situation of deliberating past the legal deadline has almost repeated every year. Since the introduction of the minimum wage in 1988, the legal review deadline has only been adhered to a total of nine times up to this year.
With the decision on the minimum wage level made that day, the Minister of Employment and Labor must announce next year's minimum wage within 10 days of receiving the decision results from the Commission. The legal announcement deadline is August 5, and the announced minimum wage will take effect from January 1, 2026.
◇The first minimum wage increase under the Yoon administration is the lowest level in the 2000s
The minimum wage increase rate decided that day is 2.9%. Labor representatives claim it is the lowest rate among the first minimum wage increases of previous governments in the 2000s.
In fact, looking at the first-year minimum wage increase rates of previous administrations, ▲ Kim Young-sam's government 7.96% ▲ Kim Dae-jung's government 2.7% ▲ Roh Moo-hyun's government 10.3% ▲ Lee Myung-bak's government 6.1% ▲ Park Geun-hye's government 7.2% ▲ Moon Jae-in's government 16.4% ▲ Yoon Suk-yeol's government 5.0%. Among these, Kim Dae-jung's government was during the IMF financial crisis. Excluding that, this is the lowest increase rate in history.
The low minimum wage increase rate is due to the review facilitation range suggested by the public interest committee members. The review facilitation range indicates that the public interest committee members believe that reaching an agreement on the minimum wage increase is difficult; thus, they set upper and lower limits. This year's review facilitation range was 1.4% to 4.1%. Even if it were determined at the upper limit of 4.1%, it would still be a lower increase rate than previous governments.
Kwon Soon-won, a professor at Sookmyung Women's University and secretary of the public interest committee, stated, "This year's economic growth forecast is only 0.8%, which is more than twice lower than last year, and inflation is also higher this year than last year," adding, "Last year we proposed a review facilitation range of 1.4% to 4.4%, and saying that this year is higher or lower than last year cannot be accepted." He pointed out that considering the overall poor economic conditions, they suggested a level similar to last year.
◇Despite the KCTU's exit, the Commission says “labor-management agreement”
The Commission stated that the process of determining the minimum wage level that day was based on a "labor-management agreement." Chairperson Lee In-jae said, "For the first time in 17 years, we reached a consensus on next year's minimum wage level without a vote." Professor Kwon Soon-won also mentioned, "Five worker commissioners remained to reach an agreement on behalf of the workers," asserting that "this is meaningful as it demonstrates a labor-management agreement for the first time in 17 years."
However, within the labor community, there are criticisms that the agreement is a "partial" one due to the mid-way exit of the KCTU. The KCTU stated after exiting the meeting that "the review facilitation range proposed by the public interest committee disregards the lives of workers and is a deceptive proposal that reflects only the employers' claims," demanding the immediate resignation of all public interest committee members who ignore the lives of workers.
In this regard, Chairperson Lee In-jae acknowledged, "It is true that we could not gain sufficient trust since the KCTU commissioners left," and noted, "We will discuss next year's minimum wage, but we will strive to have more conversations and contact to build greater trust."