Minimum wage talks enter final stretch as labor, business clash over living costs and ability to pay

Final negotiations to set next year's minimum wage got underway Thursday.

With the gap between labor and management narrowed to 990 won, the two sides remained sharply divided: labor argued that a bold increase is needed to protect low-wage workers' livelihoods and revive domestic demand, while business countered that employers' ability to pay has already reached its limit.

The Minimum Wage Commission held its 13th plenary session Thursday afternoon at the Government Sejong Complex to continue deliberations on next year's minimum wage.

Commission chair Kwon Soon-won said he hoped the session would bring the two sides "a bit closer together with a larger step forward, as I mentioned at the 12th meeting." He added that workers and employers are the true owners of the minimum wage, and that public interest members serve only to support and mediate as the two sides seek an optimal compromise. "I hope we can all work together to wrap this up today," he said. "The public interest members will also do their best."

Minimum wage deliberations follow a process in which labor and management each submit an initial proposal and then exchange successive revised offers to narrow the gap. If no agreement is reached, the public interest members propose a "deliberation acceleration range" with upper and lower bounds, within which both sides submit further revisions.

If that process also fails to produce a consensus, the final minimum wage is determined by a vote, typically based on a proposal put forward by the public interest members. As of Thursday, labor has proposed 11,450 won ($8) per hour and business 10,460 won, leaving a gap of 990 won.

Labor representatives said Thursday that current economic conditions call for a larger increase than in previous years.

Ryu Ki-seop, secretary-general of the Federation of Korean Trade Unions, said the narrowing of the gap to 990 won represents meaningful progress, but falls short of adequately reflecting the original purpose of the minimum wage and the current economic situation.

"With real wages falling and labor market polarization deepening, we need a bolder increase than in past years," he said. "A low rate of increase makes it difficult to expect the virtuous cycle of expanded consumer spending and domestic demand recovery."

He added that the past three years of modest increases had produced a vicious cycle of sluggish domestic demand. "A bold minimum wage hike that meaningfully expands the disposable income of low-wage workers is the most direct policy tool for stabilizing livelihoods and reviving domestic demand," he said.

Lee Mi-seon, vice chairwoman of the Korean Confederation of Trade Unions, expressed strong frustration with how the public interest members have been conducting the deliberations.

"The share going to minimum wage workers is already small, and the commission is pressuring us to cut it even further," Lee said. "The public interest members, who represent the government, are squeezing only labor's side in order to narrow the acceleration range."

She also said the government's reported inflation figures are averages that do not reflect what workers actually experience. "Dining-out costs, rice prices, fuel and monthly rent have all risen sharply," she said. "The minimum wage must be set based on actual household living costs, the inflation workers feel in their daily lives, and the guarantee of real wages."

Business representatives pushed back, arguing that any further increase would be a heavy burden given how widely the current minimum wage already affects employers.

Ryu Ki-jung, executive director of the Korea Employers Federation, said the minimum wage has already reached a high level and that employers on the ground have hit their limit in terms of ability to pay. "Even if the minimum wage were frozen at this year's level, it would directly affect about 2.7 million workers — 12.1 percent of all wage earners," he said.

He added that when workers indirectly affected by the minimum wage are included, at least 25 percent of all wage earners are estimated to fall within its sphere of influence. "If the minimum wage rises to labor's sixth revised proposal of 11,450 won per hour, the range of direct and indirect impact would expand far beyond that," he said.

Yang Ok-seok, head of the human resources policy division at the Korea Federation of Small and Medium Business, said the argument that the minimum wage should rise at least in line with inflation does not hold up on equity grounds. He also cited research suggesting that the sharp minimum wage increases of 2018 and 2019 had little effect on household consumption.

"Some people benefit from a minimum wage increase, but others may actually be harmed — those whose working hours are cut, those who lose their jobs, and prospective workers who lose job opportunities," Yang said. He argued that the burden of ensuring workers' livelihood stability should not fall on business owners alone, and that government social safety nets — including the Earned Income Tax Credit and livelihood support programs — must also play a role.

Seong Jae-min, a public interest member of the commission, said Thursday's discussions represent "an important social dialogue process showing how we reconcile differing interests and values." He urged both labor and management to take a forward-looking stance and make genuine progress, noting that the commission has little time remaining.