The Korea Herald


2021 minimum wage negotiations kick off

By Ko Jun-tae

Published : June 11, 2020 - 15:17

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Logo of the Minimum Wage Commission (Yonhap) Logo of the Minimum Wage Commission (Yonhap)
Discussions about next year’s minimum wage kicked off Thursday as the Minimum Wage Commission convened its initial meeting. The negotiations are expected to be anything but smooth.

Those representing labor and business present wildly divergent views of the impact the coronavirus is having on the South Korean economy.

The minimum wage is updated on an annual basis, and the rate for 2020 stands at 8,590 won ($7.22) per hour. That represents a 2.9 percent increase from last year, and the business community is asking for a freeze or even a cut for 2021. The coronavirus pandemic has significantly disrupted business, it argues.

According to a survey of 600 small and medium-sized enterprises carried out by the Korea Enterprises Federation and the Korea Federation of SMEs, 88.1 percent of respondents agreed that next year’s minimum wage should be the same as this year’s or lower. The survey also found that 58.8 percent of respondents were planning to freeze hiring or reduce head counts.

Labor representatives hold the opposite view, arguing that the minimum wage should be higher to enable low-income workers to weather the impact of COVID-19.

“Freezing the minimum wage would be a case of once again passing the economic crisis on to low-wage workers and making them sacrifice,” the Federation of Korean Trade Unions, one of two major umbrella labor groups in Korea, said in a statement.

“An adequate wage increase will increase workers’ disposable income and boost domestic spending, thereby reviving the economy in the COVID-19 crisis.”

The 27-member Minimum Wage Council -- consisting of nine representatives each from labor, business and government -- has until Aug. 5 to officially post next year’s minimum wage.

This year’s negotiations started later than usual because the coronavirus crisis limited face-to-face meetings. The council convened its first meeting of 2019 in late May.

Upon taking office in 2017, President Moon Jae-in vowed to raise the minimum wage to 10,000 won per hour during his five-year term.

The following year saw a 16.4 percent jump in the hourly rate, followed by increases of 10.9 percent in 2019 and 2.9 percent in 2020.

By Ko Jun-tae (