Discussion on 'Industry-Specific Minimum Wage Differentiation' Begins Today

Sixth Plenary Session to Be Held at 3 p.m. on the 16th

Korea Employers Federation: "Current Levels Unbearable for Food and Accommodation Sectors"

Labor Unions Demand Initial Minimum Wage of 12,000 Won

Starting on June 16, the tug-of-war between labor and management over whether to apply differentiated minimum wages by industry for next year will begin. The question of industry-specific minimum wage application has been a core issue that recurs every year since the adoption of a single minimum wage system in 1989. Recently, President Lee Jaemyung has expressed a largely negative stance, leading to expectations that the possibility of introducing industry-based differentiation this year remains low. Once the question of differentiation is settled, full-scale negotiations over the minimum wage level for next year are expected to begin. The labor side has already presented its initial demand of a 16.3% increase, bringing the hourly minimum wage to 12,000 won for next year.

The Minimum Wage Commission will hold its sixth plenary session at the Sejong Government Complex this afternoon to discuss whether to apply differentiated minimum wages by industry. Article 4 of the Minimum Wage Act stipulates that the minimum wage may be differentiated according to the type of business. In practice, differentiated minimum wages by industry were implemented in the system's first year, 1988, but a unified minimum wage system has been maintained since the following year due to labor opposition. Every year, labor and management engage in fierce confrontation over this issue.

The management side argues that differentiated minimum wages should be applied to small-scale industries such as accommodation and food service. Ha Sangwoo, Head of Economic Research at the Korea Employers Federation, stated, "Applying the same minimum wage across industries with significantly different productivity and payment capacities does not sufficiently reflect reality." According to the Federation, last year, the proportion of workers earning less than the legal minimum wage was 3.7% in manufacturing but reached 31.6% in accommodation and food services. Management insists that for industries struggling to meet even the minimum wage, differentiation is necessary to improve the system’s acceptance.

On the other hand, the labor side strongly opposes industry-based differentiation, arguing that it can lead to discrimination by imposing lower wages on workers in specific sectors. They claim that applying a lower minimum wage to sectors with many low-wage workers can entrench low-wage structures and cause a stigmatizing effect. Last year, the proposal for industry-based differentiation was rejected, with 11 votes in favor, 15 against, and 1 invalid. This year as well, with the wide gap between labor and management, the decision is likely to be determined by a vote rather than by consensus.

President Lee’s remarks are also seen as a variable. On June 14 (local time) in Italy, during a meeting with senior aides, President Lee stated, "In our country, the minimum wage is applied uniformly across regions and industries, but there seems to be a need for a more concrete explanation of the concept of the state-determined minimum wage." Many in and out of the government interpret this as effectively drawing a line against industry-based differentiation.

Once the discussion on industry-based differentiation is concluded, negotiations over the minimum wage level for next year are expected to intensify starting next week. The labor side has proposed an initial demand for a 16.3% increase, setting the hourly minimum wage at 12,000 won (equivalent to a monthly wage of 2,508,000 won, based on 209 hours per month). The two major labor unions stated, "The minimum cost of living for a single-person household calculated by the Minimum Wage Commission last year was 2,754,000 won per month, but the current monthly amount converted from the minimum wage is only about 2,150,000 won," arguing that the minimum wage does not adequately reflect living expenses. Meanwhile, the management side is expected to propose a freeze or the lowest possible increase, citing difficulties faced by small businesses and sluggish domestic demand. Last year as well, the management side called for a freeze in the minimum wage. The legal review deadline for the minimum wage is the end of June, which is 90 days after the date of the Ministry of Employment and Labor’s review request. Given the significant differences between labor and management, the final decision is likely to be pushed into July again this year.

This content was produced with the assistance of AI translation services.