KEF: "Minimum Wage 18% Higher Than G7 Average... Too Much for Small Businesses"

Minimum Wage Relative to Median Wage Similar to the UK and France Among G7 Countries

There is an analysis that, while South Korea's minimum wage level is high by international standards, its labor productivity falls short of the average.

On the other hand, it has been pointed out that the acceptance of the minimum wage is significantly low, as 4 out of 10 small business owners have an average monthly operating profit of less than 2 million won, which does not reach the monthly converted minimum wage of 2.09 million won.

According to the "Analysis of Adjustment Factors for the 2027 Minimum Wage Based on Key Statistics" released by the Korea Employers Federation on June 21, the rate of minimum wage increase over the past 10 years was significantly higher compared to the nominal wage growth rate and the inflation rate.

Comparison of Post-Tax Annualized Minimum Wage Levels in South Korea and G7 Countries (2025 Standard). Korea Employers Federation

The annualized after-tax minimum wage in South Korea, based on purchasing power parity (PPP), was USD 27,571, which is 17.9% higher than the G7 average of USD 23,390. This figure is higher than that of Germany (USD 25,486), Canada (USD 24,720), Japan (USD 18,864), and the United States (USD 12,094), except for the United Kingdom (USD 31,562) and France (USD 27,612).

In addition, the minimum wage relative to the median wage exceeds 60%, which is considered the upper limit for an appropriate level. Among major advanced countries, only the United Kingdom and France have a similar level to South Korea, while the G7 average stands at 49.3%, which is significantly lower than Korea's figure.

Notably, it was analyzed that South Korea's minimum wage remains internationally high despite the country's low labor productivity.

Over the past 10 years, the nominal wage increased by 39.6% and the Consumer Price Index rose by 22.9%, but the minimum wage surged by 79.7%. In particular, the statutory minimum wage for employees working at least 15 hours per week (eligible for statutory weekly holiday pay) increased by as much as 115.9%.

Even when considering the inflation rate (22.9%), the minimum wage increase rate (79.7%) was found to be much higher than the hourly labor productivity growth rate. Per capita labor productivity fell by 2.5%, from 103.4 to 100.8, while hourly labor productivity rose by only 12.4%.

Yonhap News Agency

The proportion of workers earning less than the minimum wage increased to 12.4% in 2025, about three times higher than the 4.3% recorded in 2001. The number of such workers rose from 577,000 in 2001 to 2,769,000 in 2025. In the accommodation and food service industries, where many sub-minimum wage workers are concentrated, the rate jumped to 31.6% in 2025 from 6.4% in 2001. In businesses with fewer than five employees, the proportion reached a very high 30.3%, indicating that it is difficult for such workplaces to cope with the current minimum wage level.

Ha Sangwoo, Executive Director of the Korea Employers Federation and a user representative on the Minimum Wage Commission, stated, "In our country, the minimum wage level, whether in relation to the median wage or when annualized, has reached a very high level internationally, while labor productivity remains below average. The minimum wage to be applied in 2027 should be determined based on businesses in industries such as accommodation and food services, and those with fewer than five employees, which are already struggling to meet the current minimum wage."

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