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By Lee Kyung-min
Over 3.2 million hourly workers were paid less than Korea's legal minimum wage last year, data showed Sunday. Some businesses claim this resulted from a rapid increase in the minimum wage over the past four years under the Moon Jae-in administration.
The cumulative increase in Korea's state-set hourly minimum wage between 2016 and 2021 was 44.6 percent, sharper than Canada's 26.5 percent over the same period. The figure for the U.K. was 23.1 percent, followed by Japan (13 percent), Germany (12.4 percent) and France (6 percent) and the U.S. (0 percent at the national level, though the effective minimum wage has increased in 30 states and Washington D.C. since 2014).
In another inter-country comparison, Korea's minimum-to-median wage ratio ― measured by the ratio of the hourly minimum wage divided by the median earnings of full-time employees ― is higher compared to that of other OECD member nations. Thus, Korea's minimum wage is 61.2 percent of the median wage for full-time employees, the eighth highest after Colombia, Costa Rica, Chile, Turkey, Portugal, New Zealand and Slovenia. The average minimum-to-median wage ratio in the OECD is 55.2 percent.
The Korea Enterprises Federation (KEF), which represents the interests of businesses and management, noted in a report using raw data from Statistics Korea that 3.2 million workers were paid below the legal minimum wage of 8,720 won ($7.09) per hour in 2021. They account for 15.3 percent of the 21 million wage and salary workers. Korea's hourly minimum wage was raised to 9,160 won this year from 8,720 won last year.
The number of workers who were paid below the minimum wage increased by 2.6 million over 20 years from 577,000 in 2001.
By industry, agriculture, forestry and fisheries saw over half, or 68,000, of their 124,000 workers received less than the legal minimum wage.
The same was true for around 40 percent of workers in the hospitality industry, while only 1.9 percent of workers in the information and communication industry received less than the minimum wage.
Similarly, 3.5 percent of science and technology service industry workers and 5.2 percent of manufacturing industry workers were among the 3.2 million workers who were paid below the minimum wage of 8,720 won per hour.
The smaller the firm, the higher the likelihood that workers were paid below the legal minimum wage.
Over 22 percent of workers at firms with less than 30 employees were paid below the minimum wage, whereas only 5.8 percent of workers at firms with over 30 workers faced the same problem.
About one-third, or 33.6 percent, of the 3.79 million workers at firms with under five employees, said that their hourly wages were below the minimum wage.
The figure sharply contrasts with the only 2.7 percent ― or 75,000 workers ― of large firms with over 300 workers who were paid less than Korea's legal minimum wage.
The KEF report argued that some employers are finding it increasingly difficult to pay the minimum wage, which has risen over the past few years.
"The figure is an indication that the rising minimum wage is not being accepted in the labor market," the KEF report said. "The rapid increases over the past should undergo a period of stabilization. Otherwise, a far greater number of minimum wage workers will see this repeating this year or the next."
