Last-Minute Tug-of-War Over Next Year's Minimum Wage: "Small Businesses Can't Endure" vs. "Real Wages Down Amid Inflation"

14th Plenary Session Held at Government Complex Sejong on July 14
Public Interest Committee May Propose Facilitated Negotiation Range to Encourage Agreement
690-Won Gap Remains... Meeting Likely to Continue Into Early Morning

As the decision on the minimum wage for 2027 approaches, a fierce tug-of-war continues between labor and management to narrow the 690-won gap. Employer representatives stressed that "due to the domestic market slump and the burden of labor costs, the payment capacity of small and medium-sized enterprises (SMEs) and small business owners has reached its limit," and insisted that "the minimum wage should be set at a level that allows for job retention." On the other hand, labor representatives argued that "amid high oil prices and inflation, real wages have decreased, making an increase in the minimum wage a direct means to guarantee the right to survival and to restore consumers’ purchasing power."

On the 14th, at the 14th plenary meeting of the Minimum Wage Commission held at the Government Sejong Complex, Ryu Kijeong, Executive Director of the Korea Employers Federation (KEF) as the employer representative, is seen touching his head while listening to the remarks of Ryu Gisub, Secretary General of the Federation of Korean Trade Unions (FKTU) as the labor representative. Photo by Yonhap News.

The 14th plenary session of the Minimum Wage Commission convened on the afternoon of July 14 at the Government Complex Sejong. Since the Minister of Employment and Labor is required to announce the minimum wage for the next year by early August, the likelihood of reaching a decision on this day is high. The public interest commissioners are expected to propose a 'deliberation promotion range,' within which agreement or a vote would be encouraged. If labor and management reach a consensus within this promotion range, the agreement will be adopted; if they ultimately fail to narrow the gap, the minimum wage will be determined by a vote. The meeting may continue past midnight into the early morning hours.

Currently, the difference between the revised proposals of the labor and employer sides for the minimum wage stands at 690 won. Previously, the labor side proposed 11,220 won (an 8.7% increase over this year), while the employer side proposed 10,530 won (a 2.0% increase over this year), narrowing the gap, but—as is often the case—considerable difficulty is anticipated before reaching a final agreement.

On this day, employer representatives strongly emphasized in their opening remarks that small business owners and SMEs are at the brink of their managerial limits. Ryu Kijeong, Executive Director of the Korea Employers Federation, stated, "Despite improvements in some macroeconomic indicators, micro-enterprises and small business owners suffering from the prolonged domestic slowdown and accumulated labor cost burden can no longer endure," adding, "This is evidenced by the all-time high outstanding loans for self-employed individuals and the reality that more than half of self-employed people are unable to cover their interest expenses with their operating income." He further pointed out, "The minimum wage is already at a high level, exceeding 12,000 won when including paid weekly leave allowance, and is comparatively high internationally based on median and average wages. The payment capacity on site has already reached its limit. Since the minimum wage is mandated by law, we urge a careful decision so that the conclusion is set at a level where employment can be maintained."

Yang Okseok, Head of Workforce Policy at the Korea Federation of SMEs, also expressed concern, saying, "For small businesses and micro-sized enterprises, even a 2% increase can threaten their survival." He reiterated, "Our original position was that the minimum wage should be cut or at least frozen, and our final threshold was an increase of less than 2%. In a situation where business closures among the self-employed continue to rise, we cannot accept an increase rate higher than 2%." Yang further stressed, "Without SMEs and small business owners, who are responsible for paying wages, workplaces and the minimum wage itself would not exist. We urge the Minimum Wage Commission to carefully consider the dire situation facing SMEs, small business owners, and agricultural workers, and to ensure that these conditions are meaningfully reflected in the minimum wage."

Lee Miseon, Deputy Chairwoman of the Democratic Labor Union and Workers' Representative, is speaking at the 14th plenary meeting held on the 14th at the Minimum Wage Commission in the Government Complex Sejong. Photo by Yonhap News

On the other hand, labor representatives argued that a bold increase is necessary to protect workers' right to survival and restore domestic demand. Ryu Gisub, Secretary General of the Federation of Korean Trade Unions, countered, "In a climate of high oil prices and inflation, the real wages of low-income workers have dropped significantly. An increase in the minimum wage will be the most direct and effective policy tool to resolve polarization and improve income distribution." He added, "What we need is not merely gradual adjustment, but a forward-looking and somewhat more aggressive decision to ensure the positive function of the minimum wage increase, and to immediately correct the distorted reality of the low-wage labor market."

Lee Miseon, Deputy Chairwoman of the Korean Confederation of Trade Unions, also stated, "Although Korea ranks 10th in the world in economic size, the lives of low-wage workers have already collapsed amid low incomes, long working hours, and a soaring poverty rate. The minimum wage must be significantly raised to actively reflect the actual cost of living, so that young people can dream of a future." She continued, "Given that the International Monetary Fund (IMF) has recently raised Korea's growth forecast for this year to 2.6% and recommended concentrating fiscal support on the vulnerable, it is now time for the Minimum Wage Commission to respond to this recommendation."

Meanwhile, looking at the minimum wage (on an hourly basis) and the annual rate of increase over the past five years: 9,160 won (5.05%) in 2022, 9,620 won (5.0%) in 2023, 9,860 won (2.5%) in 2024, 10,030 won (1.7%) in 2025, and 10,320 won (2.9%) in 2026.

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