ed Minimum wage dilemma

Negotiations to set next year’s minimum wage resumed Friday as business representatives returned to the negotiating table after refusing to attend a meeting. They absented themselves from the June 29 Minimum Wage Council meeting, opposing a proposal to state the minimum wage by the month as well as by the hour.

The proposal, which was submitted by labor representatives and supported by members representing public interests, was approved at the 27-member council meeting. Stipulating the monthly minimum wage seems to be a step in the right direction, considering that a number of low-paid workers have been deprived of payable holiday allowances guaranteed under the relevant labor law.

On Friday, the council began to discuss how much the minimum wage should be raised next year.

The labor unions lowered their demand for the new minimum hourly wage from 10,000 won, a 79 percent surge from the current level of 5,580 won, to 8,400 won. They claim that it would be hard for the poor to escape poverty for good, given that annual minimum wage growth averaged 9.8 percent from 1989 to 2014, which was similar to the average total of economic growth and inflation — 9.4 percent — during this period.

Employers proposed raising next year’s minimum wage to 5,610 won, up 30 won from the current level, changing their earlier demand for a freeze. They claim that productivity gains from 2001 to 2014 stood at 4.8 percent on average, lower than the average minimum wage growth of 8.8 percent during the period.

This year’s minimum wage talks are characterized by the fact that the government and labor seem to have sympathy in raising the minimum wage, the slightest safety net for low-income earners, by a big margin. This certainly reflects the government’s strong wish to boost consumption by letting low-paid employees receive higher salaries.

The original labor union demand of 79 percent might have been the result of seeing through such government intentions no matter how unrealistic this figure looks. As things stand, it is highly likely that next year’s minimum wage will rise by more than 7 percent, following a 7.1 percent increase this year. In that case, the hourly minimum wage will top 6,000 won for the first time.

Few can publicly oppose a sharp rise in the minimum wage, taking into account difficulties facing low-income households. The problem is that it is not large companies but marginalized small firms and self-employed business owners that should bear the burden of the sharply increased minimum wage.

Most fearful is that higher minimum wages might prompt them to lay off workers massively just to stay afloat. The Minimum Wage Council should negotiate a fair compromise as early as possible, considering the economic conditions and realistic circumstances facing companies and laborers.