Labor unions seek 16.3% minimum wage hike, employers push for freeze

Representatives from labor, management and the public discuss the rate of increase for next year's minimum wage during the Minimum Wage Commission's eighth plenary meeting at Government Complex Sejong, Tuesday. Yonhap

Labor and management began a fierce tug-of-war over next year's minimum wage Tuesday, with labor representatives seeking an increase of more than 16 percent and management representatives pushing for a freeze.

The stark differences between the two sides are expected to complicate discussions in the coming months.

The Minimum Wage Commission held its eighth plenary meeting at Government Complex Sejong, kicking off deliberations on next year's minimum wage, with labor and management representatives presenting their respective proposals.

The commission consists of 27 members — nine representatives each from labor, management and the public interest sector.

Ahead of formal negotiations, labor representatives submitted an opening proposal calling for the hourly minimum wage to be raised to 12,000 won ($7.8), up 16.3 percent from the current 10,320 won.

“The minimum wage plays a critical role in protecting low-income workers and reflects the level of social equity in the country,” the Federation of Korean Trade Unions and the Korean Confederation of Trade Unions, the nation’s two largest labor umbrella organizations, said in a joint statement. “It is time to end a pattern of growth in which only a small group enjoys the benefits of economic recovery.”

Meanwhile, employers called for keeping the minimum wage unchanged amid concerns over the financial burden on small business owners. A wage freeze has been management’s opening proposal for five consecutive years.

According to a survey of 500 self-employed people nationwide released earlier in the day by the Federation of Korean Industries (FKI), nearly 60 percent said their business conditions had worsened this year compared with last year, while more than 40 percent said next year's minimum wage should be frozen.

Among respondents, 57 percent said their business situation had deteriorated from a year earlier, while just 8.4 percent reported an improvement.

The share of respondents reporting deteriorating business conditions was highest in the wholesale and retail sector at 66.3 percent, followed by accommodation and food services at 65.8 percent.

When asked about the appropriate rate of increase for next year's minimum wage, the largest share, 44.6 percent, favored keeping it unchanged, followed by 20.6 percent who preferred an increase of more than 1 percent but less than 3 percent.

Notably, 13 percent supported a reduction.

When asked what level of minimum wage increase would prompt them to raise prices, 37.6 percent said they were already planning price hikes under the current hourly minimum wage of 10,320 won.

The survey also highlighted the income challenges facing small business owners, with 34 percent of respondents reporting earnings below the monthly equivalent of the minimum wage, currently set at 2,156,880 won.

The FKI cautioned that elevated oil prices stemming from tensions in the Middle East are already adding to cost pressures on small business owners.

"Any further increase in the minimum wage could add to operating costs for small businesses and eventually be passed on to consumers through higher prices," an FKI official said. "The minimum wage should be applied differently across industries, and decisions should take into account employers' ability to pay as well as broader labor market conditions."

With formal negotiations now underway, labor and management are expected to narrow their differences through a series of revised offers.

During last year's negotiations, the two sides submitted as many as 10 revised offers before reaching a final agreement on the minimum wage.