Small businesses, labor unions file objections to 2027 minimum wage

Controversy over the minimum wage set to take effect in 2027 continues to simmer.

The minimum wage for 2027 has been set at 10,700 won per hour, up 380 won, or 3.7 percent, from this year's 10,320 won ($7). Based on a 40-hour workweek, the monthly equivalent comes to 2.24 million won. The Minimum Wage Commission approved the figure in a vote on July 14.

Despite the decision, dissatisfaction on both the employer and labor sides remains considerable.

The Korea Federation of Micro Enterprise (KFME) and the Korean Confederation of Trade Unions (KCTU) each filed formal objections with the Ministry of Employment and Labor on Monday. The small business group argued the wage level is excessive and called for a review, while the KCTU urged a review on the grounds that the commission's process for rejecting minimum wage coverage for contract and platform workers was flawed.

The KFME held a press conference outside the Ministry of Employment and Labor in Sejong on Monday and submitted its objection to the 2027 minimum wage proposal. The group said the 10,700 won hourly rate — a 3.7 percent increase from this year — exceeds what small business owners can afford to pay.

The federation said the increase would raise monthly wages by about 79,000 won per worker, or roughly 950,000 won annually. For a business employing four workers, the added labor costs — including the employer's share of social insurance contributions — would exceed 10 million won per year.

The group also warned that with the economic slowdown and sluggish domestic demand dragging on, and self-employed borrowing at record highs with delinquency rates rising, the added burden of higher labor costs would inevitably lead businesses to cut new hiring, reduce existing staff or shut down altogether.

The KFME also pointed to a wide disparity in the share of workers earning below the minimum wage across industries — 33.9 percent in accommodation and food services compared with just 2 percent in information and communications — as grounds for applying differentiated minimum wage rates by industry. The group also called for institutional reforms, including stronger representation of small business owners on the Minimum Wage Commission and the revival of a job stability fund.

The KCTU, by contrast, took issue not with the wage level itself but with the Minimum Wage Commission's decision-making process.

The confederation held a press conference outside the Seoul Regional Employment and Labor Office on Monday and filed an objection to the commission's decision to reject a proposal for a separate minimum wage standard for contract-based workers.

The KCTU said that even though the commission formally deliberated for the first time on whether to apply a separate minimum wage to contract workers, its decision to reject the measure — citing disputes over worker status and potential market disruption — ignored recent court rulings and government-commissioned research. The confederation argued that a significant share of contract and platform workers, including delivery riders, designated driver service workers and private tutors, effectively work under the direction and supervision of employers, and a minimum wage standard should be established for them.

The KCTU also stressed that contract workers are already falling through the cracks of the minimum wage system.

A survey by the Riders Union of 137 delivery riders in the first half of this year found their effective hourly wage averaged 7,400 won, and 92 percent of respondents said their income had fallen compared with last year. A separate survey by the National Designated Driver Workers' Union found that designated driver workers' effective net hourly wage averaged 7,314 won — well below next year's minimum wage. Private tutors said they also perform unpaid work beyond teaching hours, including attending meetings, recruiting students, handling promotions and entering data, and the KCTU said the commission had turned a blind eye to the reality facing platform and contract workers excluded from minimum wage coverage.

Under the Minimum Wage Act, the minister of employment and labor may review objections filed within 10 days of announcing a minimum wage proposal and, if deemed necessary, request that the commission conduct a review. However, no minister has ever done so in practice, and analysts say the chances of an actual review are slim.

Meanwhile, Minimum Wage Commission Chairman Kwon Sun-won formally recommended institutional reforms to the ministry immediately after the commission voted on next year's minimum wage on July 14. He proposed that a dedicated body be established as soon as possible to hold comprehensive discussions on the decision-making framework, deliberation criteria, industry-specific differentiation, the scope of minimum wage coverage — including contract and platform workers — and whether regional variations should be introduced.