Minimum wage talks heat up as labor demands 12,000 won, business calls for freeze

Substantive discussions on next year's minimum wage level have begun in earnest.

Labor representatives renewed their demand for a sharp increase to 12,000 won ($8) per hour, while the business side pushed back, calling for a freeze or a level close to it in consideration of the payment capacity of small businesses. The gap between the two sides' opening proposals stands at 1,680 won. Public interest members urged both sides to narrow that gap and arrive at a reasonable figure the public can accept.

The Minimum Wage Commission held its 10th plenary session at the Government Complex Sejong on Tuesday, continuing deliberations on the minimum wage to take effect in 2027. The legal deliberation deadline expired the previous day, making it in effect the final meeting within the statutory period.

Commission Chairman Kwon Soon-won said the session was "in effect the last meeting within the deliberation period" and urged participants to "do their utmost to narrow the gap between the opening proposals submitted by labor and management."

Labor representatives made their push for an increase clear from the moment they entered the meeting room.

Placards reading "Raise it, raise it — minimum wage to 12,000 won" were placed at the seat of Ryu Ki-seop, secretary-general of the Federation of Korean Trade Unions, while the seat of Lee Mi-seon, vice chairwoman of the Korean Confederation of Trade Unions, displayed a sign reading "Minimum wage 12,000 won before Kospi 10,000."

The employer representatives' seats, by contrast, displayed placards reading "Consider payment capacity in an era of 1 million business closures" and "Minimum wage has risen 79.7% over 10 years."

The business side said the current minimum wage level is already quite high and stressed the need for a freeze.

Ryu Ki-jung, executive managing director of the Korea Employers Federation, said that when weekly holiday pay is factored in, this year's minimum wage already exceeds 12,000 won per hour. He added that when the five major social insurance programs and severance pay are included, the actual labor cost of employing one minimum-wage worker comes to roughly 2.6 million won ($1,693) per month — about 1.4 times the statutory minimum wage.

He said businesses cannot afford to hire new workers due to labor cost burdens and are struggling even to maintain existing employment, and called for "a very careful decision that comprehensively considers the payment capacity on the ground and the broader economic impact."

Yang Ok-seok, head of the human resources policy division at the Korea Federation of SMEs, said the labor side's demand of 12,000 won per hour represents a 16.3 percent increase over this year's rate — comparable to the 16.4 percent hike applied in 2018.

He said the increase in absolute terms at that time was 1,060 won, compared with 1,680 won now — 60 percent larger — and warned that "when weekly holiday pay, various statutory allowances, severance pay and the four major insurance premiums are all taken into account, the cost burden on small and medium-sized enterprises and small business owners more than doubles."

Labor representatives countered that a minimum wage increase is unavoidable given high inflation and sluggish domestic consumption.

Ryu Ki-seop, secretary-general of the Federation of Korean Trade Unions, said the minimum wage "is not simply a cost but a system that embodies the value of labor, income distribution and welfare," adding that "a wage increase that boosts consumers' spending power is above all the starting point of economic policy for reviving the stagnant domestic economy."

He also called on the government to develop support measures for small business owners and the self-employed — covering social insurance and labor costs tied to minimum wage increases — and to pursue medium- and long-term support plans rather than short-term fixes.

Lee Mi-seon, vice chairwoman of the Korean Confederation of Trade Unions, criticized the business side's call for a freeze as "in effect a pay cut," saying a freeze that fails to keep pace with inflation "cannot guarantee workers' right to survival."

Public interest members called on both sides to compromise.

Seong Jae-min, a public interest member speaking on behalf of the group, said "the time has come to move beyond restating each side's position and to start finding common ground and genuinely narrowing the differences," urging participants to "pool their wisdom to find a direction the public can accept."