Korea seeks to establish database to better analyze minimum wage impact
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According to the Minimum Wage Council under the Ministry of Employment and Labor on Sunday, it plans to establish a database that understands the kinds of impact a rise in the minimum wage has on different groups by linking worker and financial information related to business management.
The council has launched the task of establishing data by linking the employment insurance database and Korea Enterprise Data. The council also plans to conduct a research on the government’s support measures on those that are closely affected by the minimum wage system.
Industry insiders note that it will take a considerable amount of time to establish a related database. The council will have to confirm the database by August to reflect the results in setting next year’s minimum wage.
Currently, the council, when setting up the minimum wage, discussed economic growth rate, consumer prices and job growth projection as major indices. For this year, the council plans to open a third full session on Thursday.
The workers and employers, in the meantime, are at odds.
According to a survey conducted by the Federation of Korean Industries (FKI) on 500 self-employed businesses, 58.4 percent said that the minimum wage should be unchanged or lowered.
“About half of the self-employed businesses said that they will have to consider closing their businesses if a decision is made to raise the minimum wage by 5.9 percent next year, which is similar to this year’s level of 5 percent,” said an unnamed official from the FKI.
Concerns grow that a sharp rise in the minimum wage next year will lead to an increase in marginal companies as it pressures them on top of the slow economy.
The intensifying conflict between the workers and employers over minimum wage is leading to a concern that the Minimum Wage Council will be caught in the middle and will not be able to play its role properly.
According to a study by Maeil Business Newspaper based on documents provided by Statistics Korea on Sunday, the number of short-term workers that work for less than 36 hours per week surged 81.9 percent to 8.03 million in 2022 from 4.4 million in the beginning of the Moon administration in 2017. During the period, the minimum wage went up 41.6 percent.
Those that work for less than 36 hours per week accounted for nearly 30 percent of the entire workers in 2022, up from 9.7 percent in 2000. Short-hour jobs are considered poor quality work that are relatively vulnerable when it comes to wage and working environment.
The number of ultra-short-hour workers that work for less than 15 hours per week rose 64.3 percent to 1.6 million during the same period. These jobs are not subject to holiday pays or annual leaves under the country’s labor standards act. They also do not receive severance pays even if they have worked for more than one year.
A failed discussion by the Minimum Wage Council this week due to conflicting opinions by the workers and employers may lead to the minimum wage being set based on the existing method as in 2022 and 2023.
In the previous years, the minimum wage was set by adding next year’s economic growth projection of 2.3 percent and inflation forecast of 3.5 percent and taking out the job growth value.
The Minimum Wage Council needs to submit the minimum wage to the Minister of Employment and Labor within 90 days after receiving the deliberation request. The notification period of the minimum wage is Aug. 5 every year. The council will have to complete the deliberation by mid-July considering appeal procedures.
Experts call for a proper debate to make a decision on next year’s minimum wage.
“Those that will be directly affected by a sharp rise in the minimum wage are not joining as discussion members out of collectivism,” said Byoung Hoon Seok, an economics professor at Ewha Womans University.
Jungmin Lee, an economics professor at Seoul National University, noted that the council should create a separate organization that collects the opinions of the workers and employers and that the final decision should be made more based on expert opinions.
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