The unsurpassable 10,000 won barrier: Minimum wage to increase by 2.5% to 9,860 won in 2024

On July 18, the fourteenth plenary session of the Minimum Wage Commission is held in a conference room at the government office in Sejong. Yonhap News

Next year’s minimum hourly wage was set at 9,860 won (2.06 million won/month), up 2.5% from this year’s 9,620 won. A rate of 2.5% is the second smallest increase since the government began discussing the minimum wage in 1987 and is also lower than the 3.3% inflation rate projected for this year by the Ministry of Economy and Finance.

The Minimum Wage Commission made the decision after an all-night discussion in the fifteenth plenary session at the government office in Sejong on July 19.

The commission put the two final options (eleventh revision) proposed by labor and management, 10,000 won and 9,860 won, respectively, to a vote. The proposal by labor obtained eight votes, while the proposal by businesses received seventeen votes. One person abstained, and the management’s proposal was adopted.

The commission members representing public interest proposed a compromise of a minimum wage somewhere between 9,820 won and 10,150 won in the fourteenth meeting on July 18. This calculated into an increase of 2.1-5.5%. Afterwards labor and management submitted their nineth and tenth revised proposals within this scope. Labor and management managed to narrow the gap to 180 won when they each proposed a minimum wage of 10,020won and 9,840 won respectively in their tenth revision.

Public interest representatives encouraged an agreement between labor and management and proposed a compromise of 9,920 won (a 3.1% increase). They also suggested that if the two sides accepted the proposal, they would set next year’s minimum wage based on the agreement. But if any one side refused, then the commission would proceed to vote on the two final options proposed by the two sides to determine the minimum wage.

Labor representatives (4) recommended by the Federation of Korean Trade Unions (FKTU), all representatives of businesses (9), and all representatives of public interest (9) agreed to the proposal, but the labor representatives recommended by the Korean Confederation of Trade Unions (4) opposed, and the commission failed to reach an agreement. Therefore, the commission proceeded with a vote and in the end adopted the management’s proposal. Since Kim Joon-young, secretary-general of the Federation of Korean Metalworkers’ Trade Unions, an affiliate of the FKTU, was arrested and dismissed from the commission, this year’s vote was not executed according to the principle of equal number of representatives of labor, management and public interest.

An estimated 650,000-3,347,000 workers, about 3.9-15.4% of workers, are expected to be affected by the newly set minimum wage in 2024.

In a press briefing immediately after the vote, Park Joon-shik, chairman of the Minimum Wage Commission said, “The absolute level of our country’s minimum wage is extremely high. We should be proud that our minimum wage has come this far.” He argued, “We need to recognize that the minimum wage is not only an issue for workers, but a policy factor that has considerable impact on the entire national economy.”

Labor opposed the latest decision. Park Hee-eun, vice chairman of the Korean Confederation of Trade Unions and a labor representative in the commission said, “We are enraged that the minimum wage was raised by one of the lowest rates in history.”

The Korea Enterprises Federation announced, “In our first proposal, we suggested freezing the minimum wage after reflecting the wishes of small and medium-sized enterprises and storeowners, and we regret that we failed to have our proposal accepted.”

The minister of employment and labor must announce next year’s minimum wage before August 5. Labor and management can appeal the decision before it is announced, but so far, the nation has never accepted an appeal and redeliberated the minimum wage.