"Driven to Closure" vs "Open a Lifeline"...Minimum Wage Gap Stands at 990 Won (Comprehensive)

12th Plenary Meeting of the Minimum Wage Commission Held on the 7th

Although the 2027 minimum wage negotiations are nearing their end, a tense standoff between labor and management continues. Despite several revised proposals being submitted, the difference remains significant at 990 won. The management side objected to the labor side’s demand that the minimum wage should reflect the inflation rate, stating, "Producer prices have risen twice as fast as consumer prices, and if the minimum wage is increased as well, businesses will inevitably be driven to close down." In response, the labor side argued, "Raising the minimum wage is a desperate plea for a lifeline," and insisted on an increase.

The 11th plenary meeting is being held on the 7th at the Minimum Wage Commission in the Government Complex Sejong. Photo by Yonhap News Agency

The Minimum Wage Commission held its 12th plenary meeting on the afternoon of the 7th at the Government Complex Sejong and continued discussions on the rate of increase for next year’s minimum wage. In this meeting, both labor and management submitted their sixth revised proposals. The labor side proposed 11,450 won, a 10.9% increase over this year’s minimum wage, while the business side suggested 10,460 won, a 1.4% increase from this year.

The management side argued that there have been cases where the minimum wage has risen by a greater margin than the inflation rate, which is already placing a heavy burden on business owners. Ryu Kijeong, Executive Managing Director of the Korea Employers Federation, said, "The labor representatives keep emphasizing that the inflation rate should be the starting point for minimum wage deliberations, but over the past 10 years, the minimum wage has increased by 79.7%, while the consumer price index rose by just 22.9%. The minimum wage has risen approximately 3.5 times faster," stressing the intensifying burden on business owners. He added, "Rising prices are also putting greater pressure on business owners. If the minimum wage is raised again, workplaces will ultimately be forced to choose between closure and employment adjustments."

There were also concerns that an excessive increase could be decided under the pressure of the deadline. Under the Labor Standards Act, the Minister of Employment and Labor must announce the minimum wage by August 5. As a result, the Minimum Wage Commission must decide on the minimum wage by mid-July. Last year, the minimum wage for 2026 was finalized around 11:30 p.m. on July 10. Yang Okseok, Head of Human Resources Policy at the Korea Federation of SMEs, emphasized, "Although the statutory deadline for this year’s minimum wage review has passed, we must not make a rushed decision that sets the minimum wage at a level unaffordable for small and medium-sized enterprises and the self-employed." He added, "Raising the minimum wage will cause distortion in the wage system of the labor market, weaken the competitiveness of SMEs and small business owners, expand the use of workers for less than 15 hours, and result in job losses, leading to structural negative impacts across the entire industry."

The labor side argued that the minimum wage should be significantly increased to reduce labor market inequality and boost domestic demand. Ryu Kiseop, Secretary General of the Federation of Korean Trade Unions, said, "While large semiconductor companies are growing, wage gaps and income inequality in the lower tiers of the labor market are worsening, and even the right to livelihood is under threat." He pointed out, "The minimum wage will have a considerable effect not only on workers’ livelihoods but also on the pace of domestic economic recovery." Secretary General Ryu added, "However, for a minimum wage increase to lead to a real boost in domestic demand, support for small and micro businesses must also be provided in parallel."

Lee Miseon, Vice Chairperson of the Korean Confederation of Trade Unions (KCTU), criticized the public interest commissioners of the Minimum Wage Commission, saying, "While you talk about 'narrowing the gap,' you only pressure labor while the management side sticks to a freeze or mere tens of won increase." She went on, "What the public interest commissioners call a rational calculation actually devalues the work of low-income workers and drives them into isolated lives. The minimum wage must be significantly increased," she urged.

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