Business Community Regrets Minimum Wage Increase and Scrapped Sectoral Differentiation, Warning of Greater Hardship for Small Businesses (Comprehensive)

10,700 Won Set After 3.7% Increase
Debate Over Differentiated Minimum Wage by Industry Ends Without Agreement
"Negative Impact Expected on Jobs for Vulnerable Groups"

The business community has expressed disappointment over the decision to set next year's minimum wage at 10,700 won per hour. They cited the fact that the minimum wage was raised despite the requests of small business owners, and the failure to introduce differentiated minimum wages by industry.

The Korea Enterprises Federation stated in a position statement on July 15, "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 is higher than last year’s increase of 2.9%," adding, "In particular, it is unfortunate that the attempt to apply different minimum wages for sectors such as accommodation and food service, which are already at the limit of their payment capacity, was not realized."

At the 14th plenary meeting of the Minimum Wage Commission held at the Government Complex Sejong on the 14th, the minimum wage for next year was finally decided to be 10,700 Korean won per hour. Kwon Soonwon, the chairman of the Minimum Wage Commission, is stating his position. Photo by Yonhap News

Previously, at its seventh plenary meeting last month, the Minimum Wage Commission discussed the application of differentiated minimum wages by industry, but ultimately failed to reach an agreement, resulting in the 2027 minimum wage being applied uniformly across all industries. The business sector had argued for starting with differentiated application in industries with many small and struggling workplaces, such as accommodation and food service, but failed to gain sufficient support from the labor sector and many members representing the public interest.

The Federation went on to say, "Due to weakened consumer sentiment and a delayed domestic recovery caused by complex crises such as a high exchange rate and high inflation, small business owners and self-employed individuals face the double burden of declining sales and rising costs. This decision is expected to further increase the difficulties faced by small businesses and self-employed individuals, and there are concerns about negative effects on employment for vulnerable groups such as young people and low-income earners who are directly impacted by the minimum wage."

They added, "We hope that more reasonable minimum wage decisions can be made in the future by instituting differentiated application by industry and by reforming the system to prioritize employers’ payment capacity and productivity in the decision-making process."

The Korea Chamber of Commerce and Industry also commented on the latest minimum wage decision, saying, "We believe this is the result of careful consideration by the Commission of both domestic and international economic conditions and workplace acceptance." However, they predicted, "Given that the financial burden on self-employed people and small and medium-sized enterprises is already significant, this increase will also weigh heavily on workplaces."

The Chamber stated, "We hope that there will be policy support to ease the burdens on small business owners and preserve employment," and added, "Additionally, to avoid repeated annual conflict over the minimum wage decision, we hope that discussions will begin on adopting decision-making processes that reflect objective indicators and payment capacity at the workplace level."

Previously, the Korea Employers Federation had also pointed out immediately after the minimum wage decision the previous day that, "Given the difficult business realities and limited payment capacity of small businesses, SMEs, and self-employed operators, a freeze in the minimum wage was warranted."

They further expressed, "We once again deeply regret the decision to apply a single minimum wage to all industries next year, even as the rate of workers earning less than the minimum wage exceeds 30% in some sectors due to the accumulated increases and acceptance at the workplace remains extremely low."

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