Impasse on minimum wage suggests necessity for structural changes
In South Korea, the Minimum Wage Commission is currently in a stalemate regarding the proposed minimum wage increase for the upcoming year. The Minimum Wage for All campaign, an advocacy group, has been pushing for an hourly minimum wage of 11,500 won ($8.50), which represents a 14.7 percent rise from the current rate of 10,030 won.
However, this demand has not been officially acknowledged or addressed by the relevant authorities. The labor side initially proposed this 14.7% hike, but later lowered its demand to 11,260 won per hour, reflecting a 12.3% increase. On the other hand, the business side, which first wanted to freeze the wage, revised its offer to 10,090 won per hour, a 0.8% increase. Despite some narrowing, this still leaves a significant gap of about 1,150 won between the two sides.
The legal deadline for the Minimum Wage Commission to finalize the decision passed on June 29, 2025, but no agreement has been reached yet. This ongoing deadlock highlights the tension between labor demands for wage increases and concerns among small businesses about their ability to afford higher wages. Small business owners argue that aggressive wage hikes could harm their financial viability and lead to more closures, with the closure rate among small retailers and restaurants already rising.
The average monthly income of small business owners is roughly the same as the monthly equivalent of the proposed minimum wage, underscoring their limited capacity to absorb wage increases without negative impacts. Historically, while inflation adjustments have been a key argument for raising the minimum wage, over the past decade South Korea’s minimum wage has increased by 89.3%, far outpacing the 21.2% rise in consumer prices.
As the Minimum Wage Commission prepares to meet on July 12, 2024, all eyes are on the government and stakeholders to find a compromise that supports wage growth without harming small businesses' sustainability. The Minimum Wage for All campaign held a press conference and performance on the steps of the Sejong Center for the Performing Arts in Jongno District, central Seoul, on June 11, advocating for the proposed increase. If implemented in the next year, this would be the first minimum wage increase since 2023.
- The ongoing stalemate within the Minimum Wage Commission in South Korea revolves around the proposed increase in the minimum wage for the upcoming year, with the Minimum Wage for All campaign advocating for an hourly wage of 11,500 won ($8.50), representing a 14.7% rise.
- The government, businesses, and other stakeholders have yet to officially acknowledge or address this demand, creating tension between labor's push for wage increases and small businesses' concerns about their financial viability.
- Small business owners argue that aggressive wage hikes could harm their financial stability, potentially leading to more closures, as the closure rate among small retailers and restaurants continues to rise.
- The average monthly income of small business owners is roughly equivalent to the monthly minimum wage proposed by the Minimum Wage for All campaign, highlighting their limited capacity to absorb wage increases without negative impacts.
- As the Minimum Wage Commission prepares to meet on July 12, 2024, the general-news, business, politics, and arts industries are all keenly watching to see if a compromise can be found that supports wage growth without causing harm to small businesses' sustainability.
