Modest minimum wage hike reflects president's pragmatic approach to labor policy

Labor representatives from the Federation of Korean Trade Unions and Korean Confederation of Trade Unions speak to reporters at Government Complex Sejong after the Minimum Wage Commission finalized next year's hourly minimum wage at 10,700 won ($7.10), Tuesday. Yonhap

Next year's minimum wage, set with a modest increase, is reinforcing the view that President Lee Jae Myung's administration is pursuing a pragmatic economic agenda that balances the interests of workers and employers, according to analysts, Wednesday.

The hourly minimum wage for 2027 was set at 10,700 won ($7.10) on Tuesday, up 380 won, or 3.7 percent, from this year's 10,320 won.

The latest adjustment follows this year's 2.9 percent raise, bringing the average annual growth rate during the Lee administration's first two years in office to 3.3 percent.

The figure represents the second-lowest average annual rise among all governments since the minimum wage system was introduced, trailing only former President Yoon Suk Yeol's administration, which posted a record-low average of 3.1 percent.

"The data suggest that, despite its progressive roots, the Lee administration is placing equal weight on the interests of workers and businesses rather than tilting decisively toward organized labor,” said Jung Ho-chul of the Citizens’ Coalition for Economic Justice (CCEJ), a civic activist group.

Jung especially pointed to the Lee administration's average annual minimum wage hike compared with those under previous liberal governments, which stood at 9 percent under Kim Dae-jung (1998-2003), 10.6 percent under Roh Moo-hyun (2003-2008) and 7.4 percent under Moon Jae-in (2017-2022).

The minimum wage is determined by a three-way commission comprising nine representatives each from labor, management and the public interest, with the latter appointed by the government.

Although the commission is formally independent, the government inevitably exerts indirect influence over the process through the nine public interest members, who often hold the casting vote when labor and management remain divided.

“The pace of minimum wage adjustments is widely viewed as an indicator of the Lee administration's broader labor policy direction," said Shin Il-soon, a professor of economics at Inha University.

The professor said the Lee government’s handling of Samsung Electronics' labor dispute in May also aligned with this direction.

Rather than siding with the union, despite it being a traditional political support base, Lee publicly stressed that collective labor action must have certain limits and should not inflict excessive harm on society, while urging both management and labor to reach a negotiated settlement.

The dispute was ultimately resolved through government-mediated negotiations, averting what could have become Samsung Electronics' first full-scale strike.

Speaking on condition of anonymity, a researcher at a private think tank said the Lee administration likely took into account the massive investments planned by semiconductor companies, namely Samsung Electronics and SK hynix, when deciding to keep the minimum wage increase modest.

"With the country at a pivotal moment in the global artificial intelligence race, the government appears to be keeping the burden on businesses to a minimum to encourage investment," the researcher said.