S. Korea sets minimum wage for next year at $7.78 per hour, up 2.5%

The management representatives are coming out as the 15th plenary session held in the meeting room of the Minimum Wage Committee of the Sejong Government Complex was temporarily adjourned on July 19. [Photo by Yonhap]

South Korea’s Minimum Wage Commission announced on Wednesday that the minimum wage for next year will be set at 9,860 won ($7.78) per hour, representing a 2.5 percent increase from this year’s rate of 9,620 won.

This decision was reached during the commission’s 15th plenary session, following an all-night discussion at the government complex in Sejong.

The commission voted on the 11th revised and final proposal, which was presented jointly by labor and management representatives. The proposal suggested two different minimum wage rates, with labor proposing 10,000 won per hour and management proposing 9,860 won per hour.

Ultimately, the commission approved the management’s proposal of 9,860 won per hour with a vote of 17 in favor, while the labor proposal of 10,000 won per hour received eight votes. One member abstained from voting.

The new minimum wage, applicable from next year, translates to a monthly wage of 2,060,740 won based on 209 working hours. This adjustment aims to strike a balance between the interests of workers and the concerns of businesses, considering various economic factors and the current state of the labor market.

The tripartite commission representing business, labor and the public consists of nine representatives each from the three sectors, but it currently has one less labor representative as the person was detained and dismissed. It is understood that most of the public interest members voted in favor of the employers.

The biggest concern regarding next year’s minimum wage was whether it would surpass the 10,000 won mark for the first time in history. In the end, the decision fell short of the labor side’s wish for 10,000 won.

The commission began its 14th plenary session at 3 p.m. on Tuesday, but the fierce debate continued past midnight into the 15th session, and the minimum wage was finally decided at 6 a.m. in the morning of Wednesday.

The deliberation period for this year’s minimum wage set a new record within the current system, taking 110 days, breaking the previous record of 108 days set in 2016. The minimum wage system has undergone three revisions since its introduction in 1988, with the current method being implemented since 2007.

Since its inception in 1988 at 462.5 won to 487.5 won (with different rates applied only in the first year depending on industries), the minimum wage has steadily increased to 1,500 won in 1993 and 2,100 won in 2001.

Over the past five years, the minimum wage and year-on-year increases have been 8,350 won (up 10.9 percent) in 2019, 8,590 won (up 2.87 percent) in 2020, 8,720 won (up 1.5 percent) in 2021, 9,160 won (up 5.05 percent) in 2022, and 9,620 won (up 5.0 percent) this year.