Korea Economic Association Regrets Minimum Wage Hike and Rejected Industry Differentiation, Citing Increased Difficulties for Small Businesses

Minimum Wage Set at 10,700 Won with 3.7% Increase
Differentiated Application by Industry Rejected after Discussions
"Negative Impact on Jobs for Vulnerable Groups"

The business community has expressed regret over the decision to set the minimum wage for next year at 10,700 won per hour. This disappointment stems from the minimum wage being increased despite requests from small business owners to freeze it, as well as the rejection of differentiated application by industry.

On the 15th, the Korea Economic Association stated, "Although small business owners had hoped for a freeze in the minimum wage, it is regrettable that the minimum wage for 2027 has been set at 10,700 won—a 3.7% increase, which exceeds last year’s increase rate of 2.9%. In particular, we find it unfortunate that the differentiated application of the minimum wage for sectors with already limited payment capacity, such as accommodation and food services, was not approved."

Previously, at the 7th plenary session last month, the Minimum Wage Commission concluded discussions without approving differentiated application of the minimum wage by industry. The business community had insisted that the system should begin with industries such as accommodation and food services—especially restaurants, which have many small businesses—but failed to gain sufficient agreement from labor representatives and a majority of public interest committee members.

Korea Economic Association’s Stone Marker. Yonhap News Agency.

The Korea Economic Association pointed out, "Due to factors such as high exchange rates, high inflation, weakened consumer sentiment, and delayed domestic demand recovery amidst a complex crisis, micro-business owners and self-employed individuals are facing the dual challenges of sluggish sales and rising costs. We anticipate that this decision will further worsen the difficulties faced by small business owners and self-employed individuals, and are concerned it may have a negative impact on jobs for vulnerable groups directly affected by the minimum wage, such as youth and low-income earners."

The statement continued, "We hope that, moving forward, a more rational approach to setting the minimum wage will be achieved by institutionalizing differentiated application by industry and improving the system to prioritize employers' payment capacity and productivity in the decision-making process."

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