South Korea sets next year's minimum wage at 10,700 won per hour

South Korea's minimum wage for next year has been set at 10,700 won per hour, a 380-won, or 3.7 percent, increase from this year.

Labor and management narrowed their final proposals to a gap of just 30 won but failed to reach an agreement, prompting the Minimum Wage Commission to put the matter to a vote, which ended in the employer representatives' proposal prevailing.

The commission's public interest members also recommended that the Ministry of Employment and Labor establish a minimum wage reform task force to address the recurring disputes over the annual wage-setting process.

The commission held its 14th plenary session at Government Complex Sejong on Tuesday and voted to set the minimum wage applicable in 2027 at 10,700 won per hour. The monthly equivalent, based on a 40-hour workweek and 209 hours per month, is 2.24 million won ($1,620).

Labor had opened with a demand of 12,000 won per hour — a 16.3 percent increase — while management proposed freezing the wage at 10,320 won. After 13 rounds of revised proposals, the two sides closed the gap to a final offer of 10,730 won (a 4.0 percent increase) from labor and 10,700 won (3.7 percent) from management.

The public interest members proposed a deliberation-facilitation range of 10,600 won (2.7 percent) to 10,860 won (5.25 percent) per hour, then put forward a compromise recommendation of 10,720 won (3.9 percent). Labor rejected the recommendation, collapsing any chance of a negotiated settlement and forcing a vote.

All 27 sitting commissioners participated in the vote. The labor proposal received 11 votes, the employer proposal 15, and one ballot was invalid. The employer representatives' proposal of 10,700 won per hour was thus adopted as next year's minimum wage.

The number of workers affected by the new minimum wage is estimated at about 660,000 — an impact rate of 3.8 percent — based on a survey of working conditions by employment type, or about 2.978 million workers (an impact rate of 13.3 percent) based on a supplementary survey of the economically active population.

Minimum Wage Commission Chairman Kwon Sun-won said both sides had worked until the very end to close the gap, and that the final proposals were the closest in the commission's history. "I believe this vote, taken with a difference of just 30 won, amounts to a decision that is in effect equivalent to an agreement," he said. He added that while he regretted the failure to reach a formal consensus, it was meaningful that both labor and management had engaged in the deliberations to the last with a willingness to consider each other's position.

Labor groups pushed back against the outcome. The Federation of Korean Trade Unions said the 3.7 percent increase was "a deeply disappointing decision that fails to adequately reflect the desperate livelihood realities of low-wage workers." The Korean Confederation of Trade Unions said the adoption of the employer proposal — lower than the public interest members' own 3.9 percent compromise recommendation — "abandons even the minimum semblance of balance," and called for expanding minimum wage coverage to special-employment and platform workers and for broader reform of the system.

The Korea Enterprises Federation, despite seeing its proposal adopted, also expressed dissatisfaction. The federation said the minimum wage should have been frozen given the difficult operating conditions facing small businesses and self-employed proprietors, and urged the government and the National Assembly to draw up support measures for small operators and pursue institutional reforms, including differentiated rates by industry.

Meanwhile, the commission's public interest members issued a formal recommendation calling on the government to establish a minimum wage reform task force within the Ministry of Employment and Labor in the second half of this year. The task force would conduct a comprehensive review and study of the scope of minimum wage coverage and the criteria used to set it, and develop an overall reform plan for use in the next round of minimum wage deliberations.

The commission's decision will be submitted to the minister of employment and labor, who will finalize and officially announce the minimum wage by Aug. 5 following an objection period. The new minimum wage takes effect Jan. 1, 2027.