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[News Focus] With deadline looming, labor, employers still far apart on minimum wage

Minimum Wage Commission Chairman Park Joon-sik checks time before a general meeting of 27 members on Friday. Labor and business representatives have failed to narrow down their differences on next year`s minimum wage level even though only a few days are left to reach a final decision. (Yonhap)
Minimum Wage Commission Chairman Park Joon-sik checks time before a general meeting of 27 members on Friday. Labor and business representatives have failed to narrow down their differences on next year`s minimum wage level even though only a few days are left to reach a final decision. (Yonhap)
Labor and business are still poles apart over whether next year’s minimum wage should be higher or lower than it is now, with only days left in their negotiating calendar.

The Minimum Wage Commission, the rate-setting body composed of 27 representatives -- nine each representing labor, business and the general public -- is to hold its eighth session Monday to continue a discussion that has gone on for a little more than a month.

Monday is the first deadline that commission Chairman Park Joon-sik has set for next year’s minimum wage to be finalized, to ensure that the necessary preparations can take place for its Aug. 5 proclamation. By law, any change to the minimum wage must be made public by that date to be effective in the coming year.

The minimum wage is updated on an annual basis, and the rate for 2020 stands at 8,590 won ($7.15) per hour.

For next year, representatives of the business community have proposed a 1 percent cut to 8,500 won. Previously, they demanded a 2.1 percent cut.

The business side argues that a reduction is unavoidable as the local economy is expected to shrink this year and businesses are already experiencing deep financial struggles as a result of significant minimum wage hikes over the past three years.

The minimum wage rose 16.4 percent in 2018, the steepest increase in 17 years.

On the other hand, labor representatives demand a 9.8 percent hike to 9,430 won. They had earlier asked for a 16.4 percent increase to 10,000 won.

The labor side argues that a higher wage will help low-income workers weather the COVID-19 pandemic, leading to a virtuous circle of higher income, higher domestic spending and economic growth.

Prospects of a deal appear to hinge on the labor side, which showed strong opposition to the demands from business in previous sessions. If the two sides fail to narrow their differences, the nine government appointees representing the interests of the general public are likely to have the final say.

At the commission’s meeting Friday, all the labor representatives stormed out to protest the 1 percent cut proposed by the business representatives. Five of the labor representatives, who are also members of the Federation of Korean Trade Unions, said they will not participate in the Monday meeting if the employer side refuses to withdraw its proposal.

“There is a way for laborers, SMEs and proprietors to coexist without cutting the minimum wage level,” the umbrella labor group said in a statement Friday, referring to small and midsized enterprises. “If the proposal is not withdrawn, cancellation of the Minimum Wage Commission is unavoidable, and all responsibility lies with the business circle.”

After the labor representatives left the room, the business representatives engaged in a long discussion with those representing the general public, but failed to persuade them to support a cut.

“Delaying the minimum wage negotiations any longer equals denying the role of the Minimum Wage Commission,” the public interest representatives said in a statement.

“We dearly request that labor and business submit realistically negotiable demands at the eighth meeting to be held (Monday).”

By Ko Jun-tae (ko.juntae@heraldcorp.com)
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