Next year's minimum wage to be set Tuesday, with at least 2% rise expected

Next year's minimum wage is expected to be effectively decided Tuesday.

With management submitting a final revised proposal of 10,530 won ($7) per hour — a 2.0%, or 210-won, increase over this year — the minimum wage for next year is now widely expected to be set at or above that level. Labor is holding firm at 11,220 won per hour, an 8.7% increase, making the deliberation-promotion range that public interest commissioners will propose the decisive variable in the final stretch of negotiations.

The Minimum Wage Commission will hold its 14th plenary session at 3 p.m. Tuesday at Government Complex Sejong to continue deliberations on next year's minimum wage. The commission has already passed the statutory deliberation deadline of June 29. Given the administrative steps that follow — including an objection period and official notification — the commission is widely expected to vote on next year's figure at Tuesday's session.

The gap between the two sides' final revised proposals stands at 690 won. Labor is seeking 11,220 won per hour, up 900 won, or 8.7%, from this year, while management has proposed 10,530 won, up 210 won, or 2.0%. With management having submitted the 2.0% figure as its final position, that level is in effect expected to serve as the floor for the remaining negotiations.

Attention now turns to the deliberation-promotion range that public interest commissioners will put forward. That range is the negotiating band commissioners propose when labor and management can no longer narrow their gap. If the two sides fail to reach agreement within the range, a vote typically follows.

Another variable is whether employer representatives affiliated with small business groups will return to the table. Lee Gi-jae and Geum Ji-seon — employer commissioners nominated by the Korea Federation of Small Businesses who walked out of Thursday's 13th plenary session to protest a demand by public interest commissioners for additional revised proposals — had not yet decided as of Sunday whether to attend Tuesday's session.

If the two commissioners stay away, the chances of a last-minute agreement between labor and management will diminish further. In that scenario, the minimum wage would most likely be determined by a vote based on the deliberation-promotion range put forward by public interest commissioners.

Thursday's 13th plenary session also produced an unusual scene within the employer camp itself.

Lee Gi-jae and Geum Ji-seon walked out after the employer side decided to submit a proposal of 10,530 won per hour — 10 won, or 0.1 percentage point, above their previous revised offer — saying they could not accept any increase exceeding 2%. It is rare for employer commissioners to walk out of a Minimum Wage Commission session mid-deliberation.

Management's strong resistance to a wage increase stems from its assessment that small businesses have reached the limits of their ability to pay. According to a survey by the Ministry of SMEs and Startups, small business owners' average monthly business income last year was 1.91 million won — below the monthly equivalent of this year's minimum wage of about 2.15 million won.

According to the Ministry of Employment and Labor, unpaid wages from January through May this year totaled 772.7 billion won, of which 574.4 billion won — 74.3% of the total — came from workplaces with fewer than 30 employees. On the ground, the practice of splitting shifts into blocks of under 15 hours a week to reduce labor costs, known colloquially as "split part-timing," is also spreading.

Labor, meanwhile, maintains that a meaningful increase is unavoidable given high inflation and the need to protect the livelihoods of low-wage workers. South Korea's food and non-alcoholic beverage prices, measured by OECD purchasing power parity, rank second highest among member countries. Unions argue that if the minimum wage fails to keep pace with rising prices, a real-wage decline for low-income workers is inevitable.

If the Minimum Wage Commission adopts a decision Tuesday, it will be submitted to the minister of employment and labor. However, the possibility that deliberations could extend past midnight — pushing the session into a new numbered meeting — cannot be ruled out. Once the commission submits its decision, the Ministry of Employment and Labor will publicly announce the figure and open a 10-day objection period. Either labor or management may file an objection, which could trigger a re-deliberation by the commission, though no such re-deliberation has ever actually taken place. The labor minister must finalize and officially announce next year's minimum wage by Aug. 5; the confirmed rate will take effect Jan. 1 next year.