Employees and management in conflict over the adoption of minimum wages for specific sectors

The measure is expected to be voted on Tuesday for the first time in nearly 40 years.

By Jun Ji-hye

Labor and management representatives are in a contentious row over whether to introduce sector-specific minimum wages as part of ongoing discussions about setting the minimum wage for 2025.

In recent years, the proposal to set separate wages for specific industries was advocated by management, but was consistently voted down due to strong opposition from the labor sector.

The governing party says the introduction of the differentiated minimum wage, previously introduced in 1988 but not maintained since then, is necessary. They say small business owners and the self-employed are struggling financially because of what they describe as a significant increase in the minimum wage in recent years.

On the other hand, the labour sector, which criticises the law as socio-economic discrimination, argues that the differentiated minimum wage contradicts the purpose of the minimum wage system, which aims to provide workers with a minimum amount of money necessary for living.

The issue has once again become a point of contention for the 27-member Minimum Wage Commission, which includes nine representatives each of unions, management and the public. The commission began its annual meeting on May 21.

The tripartite commission was initially expected to vote during its sixth plenary session last Thursday on whether to adopt the measure for the first time in nearly 40 years. However, the vote did not take place due to opposition from the labor sector.

All eyes are on whether the issue will be put to a vote during the committee’s seventh plenary session scheduled for Tuesday.

According to sources, all nine management representatives support the initiative while all nine trade union representatives are against it. This means that public sector representatives – mainly scientists and researchers – will have the final say if the issue is raised.

The country’s minimum wage law allows for differential minimum wages across sectors, but such a measure has only been implemented once, in 1988, when the law was introduced. Since then, the same minimum wage was set annually across all industrial sectors for 36 years, until this year, when the wage was set at 9,860 won ($7.13) per hour.

During Thursday’s session, the governing side proposed differentiating the minimum wages for micro-enterprises such as restaurants, taxis and convenience stores from those operating in other industries, which may potentially result in lower wages for employees in these sectors.

“The national minimum wage has increased by 52.4 percent over the last seven years. If vacation pay is taken into account, the salary increased by 82.9 percent,” said Ryu Ki-jung, a representative of the Korea Enterprises Federation, a business lobby representing more than 4,000 companies in the country.

“It is certainly necessary to set separate wages for different industries for next year, taking into account some specific sectors that cannot afford even the current minimum wage level.”

The labor sector, for its part, says that if the measure is implemented, people will eventually hesitate to work in industries with lower minimum wages, leading to labor shortages and working against employers.

“Workers who earn as little as 2 million won a month will not be able to survive if their wage levels are further reduced given the extremely high prices,” said Lee Mi-sun, a representative of the Korean Confederation of Trade Unions, one of the two largest industry unions in Korea.

Not all countries in the world provide the same minimum wage in all industrial sectors.

Of the 187 member states of the International Labour Organization, 90 percent have a minimum wage system, and half of them have a multiple minimum wage, according to a report released in late 2020 by the Permanent Mission of the Republic of Korea to the United Nations.

Experts noted, however, that countries that differentiate minimum wages mostly favor providing higher wages in specific industries, unlike the Korean management side, which argues that some industries should be allowed to pay lower wages.

Amid continued confrontation with executives, the tripartite committee again failed to meet the legal deadline to set the minimum wage for 2025, which was Thursday. Another issue – whether the minimum wage will exceed 10,000 won per hour for the first time – is still unknown.

Since 1987, when annual deliberations on the minimum wage began, tripartite representatives have reached consensus on time only nine times.