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| gettyimagesbank |
By Yi Whan-woo
Consumer prices in Korea have grown at a faster pace than the minimum wage for nearly the past two years, prompting the real value of the minimum wage to fall, data showed on Monday.
Compiled by the Organisation for Economic Cooperation and Development (OECD) and Statistics Korea, the data showed that the minimum wage in September 2022 was measured at 106.6, as compared to the base of 100 in December 2020.
Specifically, the minimum wage jumped 1.5 percent to 8,720 won from 2020 to 2021, then another 5.05 percent to 9,160 won from 2021 to 2022.
"The measurement indicates that the minimum wage increased by 6.6 percent for one year and nine months," Statistics Korea said.
However, the pace of the increase is slower than the growth rate of consumer prices, which grew at 7.7 percent from 2020 to 2022. In particular, prices rose to a 24-year-high of 5.1 percent in 2022.
"The fact that the growth rate of consumer prices is higher than the minimum wage means that the real minimum wage dropped when adjusted for inflation," Statistics Korea said, adding that the real minimum wage measured 98.2 in September 2022 as compared to the base at 100 in December 2020.
Meanwhile, Statistics Korea forecasts that the real minimum wage for 2023 will increase because the minimum wage from 2022 to 2023 was raised by 5 percent to 9,620 won, outpacing the estimated growth rate of 2023's consumer prices at 3.6 percent.
In a press briefing after this year's first rate-setting meeting, Bank of Korea (BOK) Governor Rhee Chang-yong echoed the same sentiments regarding the forecast.
The central bank chief estimates that inflation will hover at around 5 percent in January and February but will cool down afterward and settle at 3.6 percent around November.
Concerning the real minimum wage abroad, the OECD said it decreased in 21 out of its 30 member countries during the December 2020-September 2022 period.
Among the 21 countries was the United States, where the real minimum wage was measured at 87.7.
The real minimum wage was measured at 99.7 percent for Portugal, 99.3 percent for Japan, 97.4 percent for the United Kingdom, 97.3 percent for Germany, 95.6 percent for Greece, 94.9 percent for Canada, 93.8 percent for Spain, 93.5 percent for Poland, 92.6 percent for Ireland and 88.8 percent for the Netherlands.
Of the nine countries where the minimum wage was higher than consumer prices, the real minimum wage measured 104.9 for Costa Rica, 102.3 for New Zealand, 101.5 for France, 101 for Belgium and 100.1 for Australia.
"To lower employers' costs and the risk of employment losses, some countries have introduced sizeable reductions in employer social security contributions for workers at around the minimum wage," the OECD said.
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