Negotiations begin on 2022 minimum wage

Negotiations for next year’s minimum wage are expected to be anything but easy, with labor and business representatives again proposing radically different figures from the very start.

The Minimum Wage Commission on Tuesday afternoon convened its first plenary meeting with its 27 members -- nine representatives each from labor, business and government. The commission has until mid-July to determine the new rate, which is to be formally announced Aug. 5.

The first plenary meeting merely went over basic procedures and outlined what steps would be taken in the future in negotiating for the new rate, but the meeting signals the start of a long journey to a compromise.

This year’s negotiation is likely to be as difficult as last year’s, as labor representatives ask for a 16.4 percent hike to 10,000 won ($9) per hour, which is met by the business side asking the rate to stay frozen for 2021.

With such divergent views, the talks are likely to stay stalled for weeks and push back the deadline as they did most years. The debate mostly centers on how each side understands the impact of the COVID-19 pandemic on the South Korean economy.

“Government statistics and other figures indicate that the most economically vulnerable people from the COVID-19 pandemic are the low-income working class like day-to-day workers, freelancers, part-time laborers,” the coalition of labor groups said in a press conference last month.

“But policies to protect and support these low-earning workers have remained weak, and they are exposed to greater pain as COVID-19 situation prolongs.”

The labor side has asked for the minimum wage to be raised to 10,000 won per hour, as President Moon Jae-in promised when he took office in 2017. The minimum wage for this year is 8,720 won per hour, up 1.5 percent from the 2020 rate.

The minimum wage rate rose 16.4 percent in 2018, 10.9 percent in 2019 and 2.9 percent in 2020.

The business side has asked for the rate to be frozen for next year, arguing that businesses have struggled to stay afloat from the COVID-19 pandemic and that a higher minimum wage will only increase their burden and result in job losses.

Business representative groups also issued reports suggesting that steep minimum wage hikes led to a greater number of workers being paid wages below the minimum level last year.

In a report released last month, the Korea Enterprises Federation said the number of workers paid less than the official minimum wage marked 3.19 million people last year, the second-highest number since the figure reached 3.39 million in 2019.

“The outcome shows that the labor market’s receptivity to the minimum wage level has reached its limit,” the federation said. “To increase the receptivity, we need to manage the minimum wage level for an extended period of time so that it stays below 60 percent of the median wage.”

The commission is also struggling to find consensus on who should be included in the nine seats allotted for the government.

The labor side is asking all members to be replaced for this year’s negotiations, as it believes the government representatives played a role in the minimum wage being raised just 1.5 percent this year from a year earlier, marking the smallest annual increase ever recorded.

Two major umbrella labor groups are also fighting over which organization should take five seats out of the nine entitled to the labor side.

The Federation of Korean Trade Unions has traditionally taken the five seats as it had more members, but the Korean Confederation of Trade Unions has now asked to take the five seats instead, as it surpassed the FKTU in terms of associated members last year.

The government has requested the two labor groups reach consensus on their own to ensure that the commission’s proceedings stay on schedule.

By Ko Jun-tae (ko.juntae@heraldcorp.com)